Windfall hit will hurt us, say oil and gas bosses

HUGE windfall taxes on energy firms will hit investment and cost jobs, bosses warned last night.

The Chancellor yesterday increased the levy on profits made by oil and gas firms in the UK from 25 per cent to 35 per cent. It takes their effective tax rate to a total of 75 per cent.

Mr Hunt also extended a temporary 45 per cent tax on electricity generators to 2028, saying soaring energy prices have benefited low-carbon energy producers.

The Treasury expects energy firms to pay a total of £80billion in tax over the next six years.

Mr Hunt said: ‘I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices.

‘But any such tax should be temporary, not deter investment and recognise the cyclical nature of energy businesses.’

But Scottish Power boss Keith Anderson said he was ‘disappointed’ and that renewable energy firms ‘have been singled out’. Mr Anderson said: ‘It seems it’s a recession made by gas, but a recovery to be paid for by

‘Shocked and dismayed’

renewables. Imposing this scheme to March 2028 creates a five-year long corridor of uncertainty for investors – hitting the clean energy projects we need more of to wean us off gas dependency and decarbonise.’

And trade group Brindex, which represents 20 UK oil and gas firms, said the changes will disproportionately affect independent British oil companies.

Boss Robin Allan said: ‘I am shocked and dismayed at the expansion and extension of the windfall tax.’ Mr Allan said it would ‘deter new investment in the UK across all sectors and it will play a significant role in deepening and lengthening the economic recession’.

Meanwhile, Jamie Maddock, an analyst at investment manager Quilter Cheviot, said the extension of the tax also risks ‘choking off’ investment in the transition to clean energy sources.

He said: ‘With this windfall tax landing at the same time as interest rates and inflation raising the cost of funding new projects, it could be more detrimental than when first designed.’