Rishi Sunak hints at U-turn on UK oil and gas windfall tax | Economic policy

Rishi Sunak opened the door to a windfall tax on oil and gas companies despite the policy being rejected, as Labor accused the government of sticking its head in the sand over spiraling bills.

The Chancellor has hinted at a possible reversal of a tax on oil and gas suppliers, having repeatedly refused to endorse the idea in the past when suggested by Labor and the Liberal Democrats.

It comes as Keir Starmer called Boris Johnson the “comical Ali of the cost of living crisis”, suggesting the government was in denial about the financial pressures facing households and devoid of new ideas.

Speaking to Mumsnet, Sunak said he didn’t go the windfall tax route because he didn’t want to postpone investment in new oil and gas extraction, pointing to a recent $25 investment. billion pounds by a company in the North Sea.

But he added: “What I would say is if we don’t see that kind of investment coming up and companies don’t make those investments in our country and in energy security, then of course it’s is something I would watch and nothing is ever out of place in these things.

Hours earlier, Dominic Raab dismissed the idea of ​​a windfall tax as ‘disastrous’ and ‘damaging’, while Boris Johnson dismissed it during Prime Minister’s Questions on Wednesday as a ‘business tax’.

However, the Conservatives are under intense pressure due to their lack of ideas on how to deal with inflation over 7% and even higher energy bills.

Johnson held a brainstorming cabinet meeting on Tuesday in which ministers suggested relaxing rules on how many children can be cared for by nursery staff and allowing less frequent MOTs to help people save money.

But the ideas have been criticized as inadequate by Labour, while Torsten Bell, the chief executive of the Resolution Foundation think tank, said the government had ‘lost the plot’ if it thought its ideas would make a difference substantial in people’s lives.

“Our problem is a steep increase in costs for almost everyone, which is more difficult for low- and middle-income households to bear. So the answer is either to reduce this increase in costs or to increase the incomes of these households. The allowance system is by far the easiest way to do this. Obviously,” he said.

Starmer drew the comparison between Johnson and Comical Ali – the former Iraqi minister who gained cult status for his outrageous lies – during a surly Prime Minister’s Questions, with Starmer saying Johnson was complacent about economic issues “obviously blinded” people.

The Labor leader said a mooted plan to allow motorists to get MOTs lasting two years instead of one made the ill-fated 1990s ‘cone hotline’ ‘visionary and inspiring’. He said Johnson was “just waking up to the cost of living crisis” and acted like an ostrich.

Johnson accused Starmer of “buzzing” and rejected his call for a windfall tax on oil and gas companies to help lower people’s energy bills, saying: “This guy is bound to be a permanent spectator.

In their final public speeches ahead of next week’s local elections, the two leaders traded blows during a session that focused mainly on the economy. Starmer said the UK was on track to have the slowest growth and highest inflation in the G7, and he said Johnson was failing to manage the economy properly.

In a series of targeted questions aimed at blaming the government for the cost of living crisis, Starmer said ministers were making life worse for working people with last month’s ‘tax hike budget’ and in no way not helping those whose fuel bills have skyrocketed. . “They are the party of excessive profits, we are the party of workers,” Starmer said.

He said his party would ask oil and gas companies to pay their fair share, insulate homes to reduce bills and end tax avoidance schemes by scrapping no-dom status.

Johnson rejected the windfall tax on offshore energy companies, saying it would “destroy the very companies we need to invest in energy to drive down prices for people across the country.”

Spending in the North Sea is expected to reach £21bn over the next five years, according to a September 2021 report by British oil trade body Offshore Energies UK, showing an annual rate above £3.7bn. sterling of investments reached in 2020.

Shell is considering reversing a plan that would have seen it abandon the Cambo oilfield in British waters, having grown emboldened by improving political, regulatory and economic conditions. He reconsidered after a bumper 2021, thanks to rising oil and gas prices that pushed profits to $19.3 billion from $4.85 billion a year earlier.

Sign up for First Edition, our free daily newsletter – every weekday morning at 7am

The company said this month that it plans to invest between £20 billion and £25 billion in Britain’s energy system over the next decade, although 75% will be spent on wind, hydrogen and energy infrastructure. electric vehicles offshore, rather than at North Sea oilfields.

BP boss Bernard Looney said the company was a “cash machine” after profits hit $12.8 billion, down from a loss of $5.7 billion the previous year. “We plan to continue investing in the North Sea,” BP said in its latest annual report.

Sunak hinted at more help for people with energy bills in the fall, but said it would be “silly” to support households now. “We’ll see what happens with the price cap in the fall, I know people are worried about that and wondering if they’ll go up any further,” he said. “Depending on what happens to the bills, of course, if we have to act and support people, we will, I have always said that. But it would be silly to do that now.

The comments drew criticism from the Labor Party. Tulip Siddiq, a shadow Treasury minister, said the chancellor was ‘out of touch’ as ​​families were ‘already feeling the crisis in the cost of living, hit by record rises in energy prices, record oil prices gasoline and skyrocketing cost of food and essentials.

About Natalee Broderick

Check Also

I’m a millennial, people my age have no idea how to budget, here’s how I cook a week’s worth of meals for £20

A SAVVY grocery shopper has managed to pack six meals of food for £20 while …