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Ministers differ over windfall tax on energy firms

Rishi Sunak and Dominic Raab offered contradictory views

UPDATE 1pm: Labour today seized on comments by the Chancellor after he appeared to soften his views on a windfall tax on the oil and gas companies.

Rishi Sunak said he would consider a windfall tax if the energy companies do not do enough to invest in developing Britain’s domestic energy supplies.

Speaking to Mumsnet, he confirmed his previous view that a tax may discourage investment. However, he added: “If we don’t see that type of investment coming forward, if companies aren’t going to make investments in our energy security, of course that’s something I’d look at. Nothing is ever off the table in these things.”

Labour has estimated its windfall tax would raise £1.2 billion over the year ahead to provide targeted support to households and businesses.

Ed Miliband, Labour’s Shadow Climate Change and Net Zero Secretary, today said: “As energy prices for families rocket, Rishi Sunak’s words show that the government is simply running out of excuses to oppose a windfall tax on oil and gas companies.

“The truth is that oil and gas companies are spending their record profits on billions in dividends and share buybacks.

“All the while that the government resists a windfall tax, the British people pay the price in the energy bills crisis they face.  

“It’s time the government dropped their threadbare excuses, did the right thing and put a windfall tax on oil and gas producers to bring real help to the British people.”

The Cabinet’s position appeared to be divided as Justice Secretary and deputy Prime Minister Dominic Raab said in a separate interview that a windfall tax was an ill-thought proposal. He said the Conservative government had a plan to deal with the squeeze on household incomes.

Mr Raab told Sky News: “If you look at Labour’s policy of a windfall tax – that would damage investment in energy supplies we need, and hike bills. It’s disastrous. It’s not serious.

“So what this shows is they’re coming up with frankly ill-thought through policies, but we have got a plan, a concerted plan, and I think that’s what voters want to see.”

Research published today by Aberdeen and Grampian Chamber of Commerce shows that the Treasury has already banked £1.5billion more in the first three months of 2022 than it did over the same period in 2021.

Between April 2021 and March 2022, offshore companies paid just over £3billion in tax, according to data from the Office for National Statistics (ONS).

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This is a 586% increase on the previous 12 months and is the highest level of tax paid by the industry since 2013/14.

Mr Sunak was later criticised for saying it would be “silly” for the government to provide more help to families struggling with energy bills

He rejected the idea of further help in the immediate months ahead – insisting that he was willing to make himself unpopular by sticking by his spending plans.

Hinting at possible action closer to October, he said: “Depending on what happens to bills then, of course, if we need to act and provide support for people, we will.”

He added: “But it would be silly to do that now or last month or the month before when we don’t know exactly what the situation in the autumn will be … We’ll see where we are with that if we need to do more.”

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