Windfall tax on oil and gas companies is ‘bad idea’, insists Kwasi Kwarteng
A windfall tax on the profits of oil and gas companies is a “bad idea”, Kwasi Kwarteng has insisted, amid reports it is being considered by the UK government.
The UK Energy Secretary said the move would “act against any incentive to invest”, after Chancellor Rishi Sunak insisted “no options are off the table”. Treasury officials have reportedly been tasked with looking at a potential tax.
Labour is set to put forward an amendment to the Queen’s Speech tomorrow for a one-off windfall tax to help families with the cost-of-living crisis.
Asked about the issue on the BBC’S Sunday Morning programme, Mr Kwarteng said: “I don’t believe in windfall taxes because what you are taxing is investment in jobs, you are taxing investment in wealth creation, you’re taxing investment in new technologies such as hydrogen and carbon capture.
“We want to see more investment. We don’t want to see taxes which essentially act against any incentive to invest.”
He added: “Clearly in terms of future investments, of course a windfall tax would affect that. Of course a windfall tax would be a deterrent
to trying to use the resources we have to employ more people, to upskill our workforce. I think it would be a bad idea.”
However, Mr Kwarteng reiterated that Mr Sunak is “taking nothing off the table”.
He said the Chancellor stands ready to provide more help to hard-pressed families, but ministers need to assess the likely economic impact of events like the war in Ukraine.
There have been mixed messages from the UK government on the introduction of a windfall tax.
Mr Sunak previously said he was “not naturally attracted to the idea of them”.
He told the BBC: “But what I do know is these companies are making a significant amount of profit at the moment because of these very elevated prices.
“What I want to see is significant investment back into the UK economy to support jobs, to support energy security,
and I want to see that investment soon. And if that doesn’t happen, then no options are off the table.”
He said he was “pragmatic” about the idea.
Meanwhile, Prime Minister Boris Johnson told LBC Radio “we’ll have to look at it”, before saying: “I don’t think [windfall taxes] are the right way forward”.
Labour, the Liberal Democrats and the SNP have all backed a windfall tax in order to pay for measures to combat the cost-of-living crisis.
Ed Miliband, Labour’s shadow secretary for climate change and net zero, said he believes the Chancellor will ultimately impose such a levy because it is “an unanswerable case”.
He told the BBC’S Sunday Morning: “We face a social emergency in this country. Seven million people, we know, are skipping meals because they can’t afford their bills and energy bills are rocketing upwards.
“At the same time, as a direct result of that, we have got oil and gas companies that are making billions of pounds, literally record profits.
“Of course the right thing to do is to levy a windfall tax on those oil and gas companies so we can provide proper help to families. £200 across the board, cut in bills for all families, £600 for nine million families who are facing the biggest struggles, and that is absolutely essential.
“I think it is frankly obscene that the government is refusing to do this.
“I’m not interested in their internal machinations about this, because every day that goes by when they refuse to do the right thing is another day when millions of people in this country have sleepless nights about how they are going to afford their bills.
“My message to the Chancellor is this: you’re going to do a windfall tax. I believe he is going to do a windfall tax because, frankly, it’s an unanswerable case. Get on with it and do it, and bring real help to families.”
Conservative MP Robert Halfon recently backed the idea of a windfall tax, saying: “Margaret Thatcher did it, David Cameron has done it, Conservative governments have imposed windfall tax on oil companies in times of need.”
Speaking on BBC Radio 4’s Today Programme, he said the government had done “a fair bit” to tackle the cost-ofliving crisis but that families were still struggling with food and energy bills.
He said: “I do think that the government should consider properly a windfall tax.
“Oil companies or oil bosses are the new oligarchs – one of them earning a salary over £76 million, getting a £4.5m bonus.”
Frances O’grady, head of union body the TUC, told Sky’s Sophy Ridge that the Chancellor has “woefully failed” to help families struggling with the cost-of-living crisis.
She said workers are being treated like “cash machines” and called on Mr Sunak to boost the minimum wage throughanemergencybudget.
She said: “All the evidence is that prices have been driven by increases in energy prices, certainly not wages, which are set to fall in real terms.
“What we need is for the Chancellor, who I’m afraid woefully failed working families, to come back with that windfall tax on energy companies that would provide some immediate relief.”
Elsewhere, Ms O’grady said Mr Johnson’s plan to cut 90,000 civil service jobs marks a return to austerity and will damage public services.
Warning post-brexit financial services changes could spark race to the bottom
The UK’S new post-brexit focus helping the financial sector compete could spark a harmful race to the bottom and undermine the government’s levelling up plans, a former minister and many academics have warned.
In an open letter to Chancellor Rishi Sunak, former business secretary Sir Vince Cable and others said they were worried about the new plans.
“We are writing to express our concern about proposals for the UK’S Financial Services Future Regulatory Framework (FRF) to give regulators statutory objectives to promote competitiveness after Brexit,” the letter reads.
They warned that while this might lead to “good” competitiveness such as financial firms providing cheaper and better products or services, it could also lead to “bad” competitiveness. This could