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Friday, May 20, 2022

'No option is off the table' when considering windfall tax on oil and gas firms, Rishi Sunak says

'No option is off the table' when considering windfall tax on oil and gas firms, Rishi Sunak says

Some senior politicians have expressed concern that a windfall tax could deter oil and gas firms from investing in the UK, but some of these firms, such as BP, have said it would make no difference.

There are mixed messages coming from the government about the possibility of a windfall tax on oil and gas firms, as the cost of living crisis continues to ravage the economy.

Speaking earlier on Thursday morning, Chancellor Rishi Sunak said that, while he was "not naturally attracted" to the idea, "no option is off the table".

Prime Minister Boris Johnson said later that the government would "have to look at it", before saying: "I don't think (windfall taxes) are the right way forward."

Then at lunchtime, Mr Johnson's official spokesperson said that, although "we are simply not cutting off options", it had been set out by the prime minister and chancellor that "we do not think that this is the right approach".

Tory MPs are already uneasy about the rising tax burden and in a Commons debate on the Queen's Speech on Thursday, backbencher Sir Christopher Chope called for the govenment to reject the idea.

He said windfall taxes wer "a simplistic solution which always end up hurting the ordinary people who work in this population hardest".

It comes as energy companies continue to benefit from rocketing prices, and British households struggle with record rises in energy bills, higher council tax and National Insurance payments, higher fuel prices and soaring inflation.

Among the reasons behind the price rises are Russia's war in Ukraine, which has resulted in sanctions and supply constraints. There has also been an increase in demand for various things as the world emerges from the worst of the coronavirus pandemic.

There have been calls for the government to implement a windfall tax on oil and gas companies to help fund the recovery - this is a one-off tax on firms that have benefited from something they were not responsible for.

Mr Sunak said: "I'm not naturally attracted to the idea of windfall taxes in general. I find that people fall into two camps on windfall tax.

"There is a group of people who think you can never have a windfall tax, and there's another group of people who think they're a very easy answer to every problem. I'm not in either of those camps - I'm pragmatic about it.

"What I do know is that these companies are making very significant profits right now because of the prices that we're seeing.

"What I want to see is significant investment back into the UK into the economy for jobs and energy security and I want to see that soon. If that doesn't happen then, as I've said, no option is off the table."

Ministers will 'have to look' at windfall tax


Earlier on Thursday, Prime Minister Boris Johnson suggested the government would "have to look" at the idea of a windfall tax.

"The disadvantage with those sort of taxes is that they deter investment in the very things that we need to see them putting them in," Mr Johnson told LBC.

"They need to be investing in new technology, in new energy supplies for the UK."

Bernard Looney, chief executive of BP, recently said that his company's investment plans would not be affected by any windfall tax.

He told the company's AGM on Thursday: "Our 18bn plans are not somehow contingent on whether or not there is a windfall tax."

But he added: "By definition, windfall taxes are unpredictable - and so would challenge investment in home-grown energy... We would love to invest even more - and one of the key foundations of any such decisions will be a stable fiscal environment."

When the notion of BP accepting the idea of a windfall tax was put to him, the prime minister replied: "Well then we'll have to look at it.

"What I say is I want them to make those investments - they've got to be making those investments - in new energy supply for our country."

When pushed again about the possibility of a windfall tax, Mr Johnson said: "I don't like them.

"I don't think they're the right way forward.

"I want those companies to make big, big investments."

The prime minister's official spokesperson said on Thursday: "We do keep options on the table and rightly so, because we need to and that's the right approach given the sort of challenges we're seeing.

"But as the prime minister set out, and the chancellor said, we do not think that this is the right approach. We want these companies that are making profits to make further investments, we've seen some of that already.

"We are working with these companies to encourage them to make further investments and we've seen multibillion-pound investments already made And we will keep doing that.

"But we are simply not cutting off options given the circumstances we are facing."

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