Tory backlash over energy windfall tax
Chancellor is rebuked by his own minister in rare clash
JEREMY Hunt’s extension of the windfall tax on North Sea energy giants sparked a furious backlash among Scottish Tories – including from a fellow minister.
The Chancellor confirmed yesterday that the Energy Profits Levy (EPL), which charges oil and gas firms an extra 35 per cent tax on the money they make in the UK, will be extended for a year until April 2029.
But in a highly unusual intervention, science minister Andrew Bowie branded the move ‘deeply disappointing’ and vowed to try, with Scottish Conservative leader Douglas Ross, to overturn it.
They raised fears it could hit the sector’s ability to invest and grow in the region, affect jobs and lose the Tories votes north of the border.
Mr Ross also warned the Government could face a mini rebellion over the issue when the laws needed to enact the extension are brought before the Commons.
Mr Bowie, who has served in government since 2018 and is MP for West Aberdeenshire and Kincardine, posted: ‘There is much in this Budget to welcome. Much that is good for Scotland and our United Kingdom. And only the Conservatives have a plan. However, the extension of the EPL is deeply disappointing. I will be working with Mr Ross to resolve this.’
That statement puts Mr Bowie at odds with the Government’s position and could threaten his frontbench role.
Mr Ross, MP for the Scottish seat of Moray, said: ‘I’m deeply disappointed by his decision to extend the windfall tax. The SNP and Labour have abandoned 100,000 Scottish workers by calling for the taps in the North Sea to be turned off now.
‘Although the UK Government rightly opposes this reckless policy, and has granted new licences for continued production in the North Sea, the Budget announcement is a step in the wrong direction. I will not vote for the separate legislation to pass the windfall tax extension and will urge the Chancellor to reconsider.’
During a ‘heated’ discussion at an event on Monday when details of the move had already leaked, Mr Ross is reported to have warned Rishi Sunak it would lose the party votes in Scotland.
Mr Ross was persuaded not to quit by Scottish Secretary Alister Jack but warned that he would be criticising the move. The windfall tax was introduced as a response to soaring profits amid spiralling energy costs in May 2022 following Russia’s invasion of Ukraine.
Mr Sunak introduced a 25 per cent EPL as chancellor and Mr Hunt increased it to 35 per cent.
It applies to profits made from extracting oil and gas – and in its first year, the scheme netted the UK government an extra £2.6billion. It had been due to end in April 2028 but Mr Hunt yesterday said: ‘Because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits.’
Labour pounced on dispute with shadow Scotland secretary Ian Murray quipping: ‘A Government minister railing against his Government’s Budget. The ink isn’t even dry and it’s falling apart.’