Oil and gas windfall tax worth exploring

Calls for measure as part of emergency Budget set to grow as energy firms report best figures for years

Interest rates are expected to be raised to their highest level since 2009 this week as the Bank of England tries to cool rocketing inflation, which is already at a 30-year high of 7 per cent and threatens to go into double digits by the autumn.

Soaring energy prices compounded by the war in Ukraine have led households and businesses to tighten their belts, with the CBI warning firms might need further support before the autumn Budget. The cost crunch is expected to tighten its grip later this year when the energy price cap is revised once again,

Against this backdrop, calls for an emergency Budget come as no surprise. Business Secretary Kwasi Kwarteng did not rule out such a move yesterday, as he revealed he has written to the energy industry demanding a “very clear plan” is put in place to spend profits on accelerating domestic production.

Critics, however, say this does not go far enough and that the Government should instead impose a windfall tax on oil and gas firms.

It seems certain such a move would have broad popular appeal.

This week the UK'S biggest oil companies are expected to present what is likely to be their best set of results for years. BP and Shell are predicted to report a combined £10.5 billion in profit from the first three months of the financial year.

This would be a massive rise on the same period last year, with much of it coming from cash households are paying to keep lights on, heat homes, and fuel cars.

Labour has claimed its demands for an emergency Budget, including a windfall tax, could cut annual household energy bills by up to £600.

Perhaps the first step towards imposing such a levy on the likes of BP and Shell should be an acceptance of the fact that oil and gas will continue to form a signification portion of the UK’S energy consumption for many years to come, no matter how green the ambitions of incumbent administrations at Westminster and Holyrood.

The transition to “net zero” will be exactly that – a transition, rather than a sudden cessastion of one form of energy in favour of another.

Revenue generated through a windfall tax from North Sea oil and gas production could then be used both to alleviate the cost-of-living crisis and to invest in renewables.