Ministers warm to ‘wildly popular’ energy windfall tax

A WINDFALL tax on oil and gas companies is “wildly popular” with the public, internal government polling has discovered, as ministers warm to the idea.

Voter research conducted in Whitehall has found that as many as eight in 10 people back the tax raid on energy companies with increased profits, The Daily Telegraph can reveal.

The polling is said to have found voters consider oil and gas companies “corporate cowboys” who have profitted from soaring prices. The results help explain why Rishi Sunak, the Chancellor, has kept the door open to a one-off windfall tax – a move that the Conservative Party traditionally opposes.

It comes amid mounting pressure from the public and MPS from all parties to offer more help over the cost of living crisis as prices and energy bills soar.

Tomorrow official inflation figures are expected to show prices jumped by more than 8 per cent in April, the month the energy price cap increase kicked in.

It is expected to trigger warnings of a return to 1980s-style inflation and heap pressure on the Bank of England, whose remit is to keep inflation at 2 per cent.

Lord King, a former Governor of the Bank, yesterday accused it of “serious mistakes” in fighting inflation. He told LBC: “Central banks around the world have made serious mistakes in not acting much sooner. Including ours.”

Meanwhile, ministers are understood to be planning a crackdown on consumer rip-offs as they seek quick measures without spending implications.

Speaking in the Commons yesterday, Mr Sunak repeated the Government’s public position on a windfall tax, which avoids making a final decision.

He said: “We are pragmatic and what we want to see are energy companies who have made extraordinary profits at a time of acutely elevated prices investing those profits back into British jobs, growth and energy security.

“But as I have been clear, and as I have said repeatedly, if that doesn’t happen soon and at significant scale then no option is off the table.”

The holding position reflects the Tories’ traditional stance that windfall taxes would deter investment, but does not rule out the adoption of the move.

Labour attempted to force an amendment to the Queen’s Speech to bring in the windfall tax, but Tory MPS were ordered to vote it down. The argument given was that the governing party always opposes attempts to change its legislative agenda, which was announced in the Queen’s Speech.

However, privately it is understood some Cabinet ministers are warming to the idea – pushed hard by Labour – given internal polling shows it is popular with voters.

There is also some surprise from ministers and officials involved in talks with oil and gas companies that there has not been more push back to the proposal.

The move could generate billions of pounds for the Treasury at a time when public spending pressures remain high ahead of the autumn Budget.

However, the politics of a new tax rise is not straightforward, given the Tories are already facing demands from Conservatives to cut taxes as the economy shows signs of faltering.

Several senior Tory backbenchers have urged ministers to back the tax.

Robert Halfon, a former minister, described oil company bosses as “the new oligarchs” and said the Chancellor should “consider a windfall, which we can then use to cut taxes for the lower paid, or cut energy bills”.

Mel Stride, the Tory chairman of the Treasury select committee, said: “We have heard of the windfall tax in great detail. I would support that.”

Meanwhile Ed Miliband, the former Labour leader, predicted Mr Sunak would adopt the policy and noted the support of Lord Hague, the former leader of the Conservative Party.

“I say this to the Chancellor: swallow your pride and get on with it,” he said.