Windfall tax on oil companies is a mistake, insists energies chief

THE current tax system works and should not be changed with a windfall tax, the head of the body that represents the UK offshore oil and gas industry has said.

Prime Minister Boris Johnson has come under pressure to introduce a one-off levy on firms that have benefited from globally high oil and gas prices and use the revenue to fund measures to ease the cost-of-living crisis on households struggling with rising bills.

Offshore Energies chief executive Deirdre Michie told Times Radio the Treasury will get £8 billion from the sector and another £5bn next year, that is on top of £370bn which has been paid over the last decade.

She said: “The point is that the tax regime is working. The Government can use those monies to spend on helping consumers. We recognise the crisis is a massive and significant one which does need addressing.

“We need these companies to keep investing in oil and gas for security of energy supply but we also need them to invest in the energy transition.

“We have identified up to £250bn of investment opportunity over all of the energies but only a third of that is sanctioned, so that if people start to feel this is not a good place in which to invest they will take their investment elsewhere.”

She said many operators, other than BP, in the North Sea are

“really worried” that a windfall tax could impact their investments.

She added: “The supply chain relies on work from the operators.

“They are really concerned that if an investment from the operators starts to step away it will undermine the projects they are hoping to come through and that is where the jobs start to go.

“It is the supply chain that has the jobs. It also has the expertise and the skills that are going to underpin the energy transition.

“We should be in no doubt that it is the whole gas companies their supply chain that is going to drive the energy transition forward.”

Mr Johnson will make a decision on whether to impose a windfall tax on oil and gas giants “soon”, according to Downing Street.

A No 10 spokesman said: “Our position on that remains the same, the PM and the Chancellor have both been clear that they are not attracted to the idea of a windfall tax.

“We’ve spoken before about our desire to see the industry invest in the UK economy to benefit jobs and growth but also the Chancellor’s been clear that if that doesn’t happen no option is off the table.”

Pressed when businesses need to show investment, the spokesman said: “We’ve never put a specific timeline on it but the Chancellor said if that doesn’t happen soon and at significant scale then no option is off the table.

“So as you see from the Chancellor’s words, if that doesn’t happen soon.”

Asked how soon, he said: “We haven’t put a timeline on it.”

Meanwhile, Jacob Rees-mogg said a windfall tax is not a “panacea” for inflation.

The Brexit Opportunities And Government Efficiency Minister told Sky News: “The question is what do you solve by a windfall tax? Are you just saying that you don’t like the oil companies?

That may be a perfectly reasonable thing to say, but that’s not a very good basis for taxation.

“Retrospective taxation is difficult because you’re changing the understanding on what people do when they invest.

“It’s difficult because tax on corporations ultimately falls on individuals anyway.

“It either falls on individuals because the companies, to maintain their margin and that margin around the world, increase their pricing in the UK – or it falls on individuals because the profit doesn’t fall through to the dividends that fund their pensions. I think the idea that a windfall tax as a panacea to the inflation problem is wrong.”

And speaking from Powys in Wales, Mr Johnson told Sky News: “I care deeply about the crunch now, but what we have to avoid, also, is future crunches and future spikes in the cost of energy.

“It is insane that this country is piping in electricity from the continent, from France. Crazy, when we’ve got hydrocarbons of our own, that we’re continuing to take them from Putin’s Russia.”