London Daily

Focus on the big picture.
Thursday, Apr 02, 2026

Rishi Sunak: windfall tax an option if oil firms fail to invest in UK

Rishi Sunak: windfall tax an option if oil firms fail to invest in UK

Chancellor says he is ‘pragmatic’ about introducing a levy on energy companies to ease cost of living crisis

Rishi Sunak has insisted he is “pragmatic” about the idea of a windfall tax on energy companies, claiming “no options are off the table” in the clearest sign yet that the government is planning measures to tackle the cost of living crisis.

Labour has been calling for a windfall tax on oil firms, which have benefited from rocketing global prices, with the shadow chancellor, Rachel Reeves, suggesting the proceeds be used to cut domestic energy bills.

Sunak and Boris Johnson had previously suggested such a tax would disincentivise investment in the North Sea.

They appear to be warming to the idea, however, amid intense pressure to do more to help hard-pressed households weathering surging inflation. It is understood Treasury officials are working up possible options.

Sunak told the BBC in an interview on Thursday that he was “not naturally attracted to windfall taxes in general” but was “pragmatic about it”.

“These companies are making a significant amount of profit at the moment because of these very elevated prices,” the chancellor said. “What I want to see is significant investment back in the UK economy to support jobs, to support energy security, and I want to see that soon. If that doesn’t happen then no options are off the table.”

Bernard Looney, the chief executive of BP, said at the company’s annual meeting in London on Thursday that a windfall tax could discourage investment in the UK – though he said it would not affect BP’s immediate plans.

“By definition windfall taxes are unpredictable – and so would challenge investment in home-grown energy,” he said.

BP was planning £18bn of investments in the UK over the next eight years, which he said were not contingent on whether or not there was a windfall tax. “We’re also backing Britain because it is a great place to invest your money,” he added. “We would love to invest even more – and one of the key foundations of any such decisions will be a stable fiscal environment.”

He said BP’s UK tax bill would “rise four to five times this year – to well over £1bn”, arguing “we rightly pay higher taxes” due to higher oil prices and profits.

Looney refused to say whether he had spoken directly to the prime minister regarding a windfall tax. Asked why he had commented publicly, he said: “We wanted to put our position on the record.”

Sunak had already hinted at a shift in his position in a Mumsnet interview last week. The business secretary, Kwasi Kwarteng, is known to be less enthusiastic, however, saying: “I think it discourages investment.” An aide said Kwarteng remained opposed to windfall taxes in principle.

Johnson appeared to echo that view on Thursday, telling LBC radio: “The disadvantage with those sorts of taxes is that they deter investment in the very things that they need to be investing in – new technology, new energy supply.” He did not rule out such a measure, however.

The shadow environment secretary, Ed Miliband, said: “The case for a windfall tax on the oil and gas giants making record profits whilst energy bills spiral for working people has been clear since Labour first proposed it in January. The Conservatives have opposed it at every turn. Now, as their excuses are wearing thin, we hear that they are finally considering it. But how much more time does this government need to make up its mind, whilst the British people suffer?”

The chair of Tesco, John Allan, added his voice to calls for a windfall tax earlier this week, as did the senior Conservative backbencher Robert Halfon.

Allan said: “I think there’s an overwhelming case for a windfall tax on profits from those energy producers, fed back to those most in need of help with energy prices. I think that would be the single biggest thing that could be done.”

Sunak’s spring statement in March included several significant tax cuts, including an increase in the national insurance threshold that partly offset the impact of the health and social care levy.

But he was criticised for failing to do enough for the poorest people. A recent survey by the Food Foundation thinktank found that more than 2 million adults had gone without food for an entire day in the past month because they could not afford to eat.

Sunak has said he wants to wait until the Treasury has more information about how sharply energy prices are set to rise in the autumn before taking more action. But he dropped a hint on Thursday that new measures were coming, telling Sky News he was “ready to do more”.

“I know these are anxious times, and because the challenges we face are global in nature, I can’t just make them all disappear. But where we can make a difference, of course, we are, and that’s why we’re investing billions of pounds already to support families and businesses through some of the challenging times ahead,” he said.

Newsletter

Related Articles

0:00
0:00
Close
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
Bank of England Signals Caution as Bailey Advises Markets Against Expecting Rate Hikes
UK to Convene Global Coalition to Restore Shipping Through Strait of Hormuz
Trump Signals Possible NATO Reassessment, Emphasizes Stronger U.S. Strategic Autonomy
Australia Joins British-Led Efforts to Reopen Strait of Hormuz Amid Escalating Tensions
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
×