Wind generators urge Hunt to call off tax raid
Wind farm bosses warn that levy on generators is making it harder to raise funds for power projects
Jeremy Hunt has been urged to reverse a tax raid on electricity generators amid warnings that billions of pounds of green investment could be at risk. In a letter to the Chancellor, seen by The Daily Telegraph, executives from seven wind farm companies said a windfall tax on the industry was making it harder to attract private investment to Britain. The letter adds to mounting pressure on Mr Hunt to offer tax breaks and incentives in his spring Budget.
JEREMY HUNT has been urged to reverse a tax raid on electricity generators amid warnings that billions of pounds of green investment could be at risk.
In a letter to the Chancellor, seen by The Daily Telegraph, executives from seven top wind farm companies said a windfall tax on the industry was making it harder to attract private investment to Britain.
The letter adds to mounting pressure on Mr Hunt to offer tax breaks and incentives in his spring Budget to encourage more business investment.
The Resolution Foundation warns that Britain risked permanent stagnation unless it took steps to “encourage more firms to invest and people to work”.
The wind farm letter was signed by executives from EDF, ENBW, ESB, Ørsted, Ocean Winds, RWE and Statkraft, along with representatives from industry bodies Energy UK and Renewableuk.
Between them, the energy companies plan to invest £48bn in Britain up until 2030. But they said the clean power sector as a whole needs to raise an additional £500bn in private investment to meet the Government’s ambitious climate targets. Rising costs and regulatory burdens are imperilling that goal, they warned.
The letter to Mr Hunt said: “Rising costs, regulatory uncertainty, and increased international competition are having an impact on our ability to attract investment here. The UK cannot rest on its past laurels but must power on in the race.”
They called on Mr Hunt to bring the electricity generator levy in line with the separate windfall tax on oil and gas companies. Under the energy profits levy, oil companies can offset investment in new North Sea developments against their final tax bill. However, there is no similar allowance for generators, industry bodies have complained.
It came as Shell’s new boss warned that the UK was becoming less attractive to invest in. Wael Sawan said the Government should “take a page from some of the things that the US have done recently through the Inflation Reduction Act”, a $369bn (£306bn) package aimed to boost green investment in America.
The UK’S electricity generators levy was introduced to stop generators making excessive profits after power prices were artificially inflated by the price of gas. Wind farms and nuclear plants benefited even though their costs did not rise.
Mr Hunt is under growing pressure to introduce more business-friendly policies across the board after the betterthan-expected recent outturn of public finances.
The Resolution Foundation expects stronger tax receipts and falling energy prices to help Britain avoid a protracted recession and sees Mr Hunt borrowing £30bn less than forecast this year.
Reports suggest the Office for Budget Responsibility is sceptical about the Chancellor’s plans to boost the economy by growing the workforce, in further evidence that Downing Street must do more to encourage productive investment to secure long-term growth.
The Resolution Foundation said Mr Hunt should consider allowing companies to fully expense investment costs against their tax liabilities after the “super deduction” ends in April. Such a policy would cost £11bn upfront, but boost investment in the long-run.
Separately, the Adam Smith Institute urged the Government to give businesses an unlimited investment allowance, scrapping the current cap of £1m a year.
Mr Hunt has been reluctant to commit to such policies given their cost and concerns about meeting his fiscal goals.
He will reportedly maintain cuts to R&D tax credits that will save the Exchequer £4.5bn over the next five years, despite outcry from start-ups. Tech businesses have been lobbying the Treasury to reverse the cuts, which will reduce the amount start-ups can reclaim from the taxman against research costs.
A Treasury spokesman said: “The electricity generator levy is a temporary measure which is not designed to penalise electricity generators. The continued investment of generators in the industry is vital to our long-term energy security and this levy leaves them with a share of the upside they receive at times of high wholesale prices.”