Power firms shrug off fresh windfall tax raid

SHARES in power companies were among the biggest risers on the stock market despite being hit with a windfall tax.

In a bid to shore up Britain’s finances, Chancellor Jeremy Hunt unveiled a new 45pc levy on the profits made by electricity generators from next year.

These firms have seen their profits surge as households face soaring energy bills following Russia’s invasion of Ukraine.

The ‘ temporary’ tax raid will ‘help fund Government support for energy bills and vital public services’, the Treasury says.

But shares in the power sector rose, with British Gas owner Centrica up 5.4pc, or 4.72p, to 91.7p while SSE gained 1.5pc, or 25p, to 1669p and Drax added 5.4pc, or 31p, to 601p.

Laith Khalaf, head of investment analysis at AJ Bell, said: ‘It’s notable that the power companies saw a jump in their share prices, suggesting investors think the windfall tax isn’t as bad as expected.’

Hunt also launched a fresh raid on oil and gas firms, hiking the energy profits levy to 35pc from 25pc until the end of March 2028. This brings the total tax on the sector to 75pc.

The two measures are expected to raise around £14bn next year.

Shares in oil giant BP dipped 0.6pc, or 2.7p, to 478.65p while Shell fell 0.3pc, or 6p, to 2364.5p.

North Sea- focused Harbour Energy fell 5.9pc, or 19.7p, to 314p and Ithaca Energy dropped 4pc, or 8p, to 192p.

Banking stocks rose, however, as the sector escaped a windfall tax of its own. Lloyds was up 3pc, or 1.29p, to 44.42p while NatWest rose 2.5pc, or 6.1p, to 253p.

As the Office for Budget Responsibility warned of a recession lasting a little over a year, and the Chancellor unveiled a painful £55bn package of tax rises and spending cuts, the FTSE 100 fell 0.1pc, or 4.65 points, to 7346.54 while the FTSE 250 rose 0.1pc, or 9.91 points, to 19,122.34.

The pound also slipped, but it was notable that the reaction was far calmer than after Kwasi Kwarteng’s mini-Budget in September when financial markets went into meltdown.

‘In the first instance Jeremy Hunt will therefore likely be satisfied he hasn’t broken the unwritten but important fiscal rule: don’t spook the markets,’ said Khalaf.

Halma fell 4.3pc, or 102p, to 2247p after profits slumped 13pc to £145.5m in the six months to September. The safety equipment maker said this was due to the £34m sale of its safety sector business in the first half of last year.

Residential landlord Grainger cashed in on soaring demand within the rental market.

The group delivered a record increase in rental income which surged 22pc to £86.3m for the year to September.

This was above the £83.8m pencilled in by analysts at Numis.

Grainger said this was down to increased occupancy, which was at a record-high of 98pc. Shares rose 1.1pc, or 2.6p, to 239.4p.

But commercial landlord Great Portland Estates sank 1.8pc, or 9.5p, to 533.5p after a loss and a fall in the value of its portfolio. The group lost £86.7m in the six months to September, having made a £62.4m profit a year earlier. And the value of its portfolio slid 3.4pc to £2.6bn.

Meanwhile, housebuilder Crest Nicholson fell 2.9pc, or 6.4p, to 214.8p following its decision to delay opening a third new division in the current financial year due to the economic turmoil.

Pub group Fuller’s rose 2pc, or 10p, to 502p after it said the World Cup and Christmas should boost business.

Revenue rose 45pc to £168.9m in the six months to September, despite soaring inflation and rising energy costs.