Autumn Statement: Jeremy Hunt outlines plans for windfall taxes

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Chancellor Jeremy Hunt has announced a large hike in the taxes slapped down on the profits of energy giants, which will go from 25 percent to 35 percent until 2028 as the Treasury scrambles to shore up funds to plug the £55billion fiscal black hole Government finances. Mr Hunt said that the windfall tax should not deter investment, one of the main reasons the previous cabinet had been reluctant to increase the Energy Profits levy. 

The Treasury chief also announced that electricity generators also will have to pay a new temporary levy of 45 percent. Together with the windfall tax, he said that the combined measures could raise as much as £14 billion next year. 

Mr Hunt told the House of Commons as he unveiled the Autumn budget on Wednesday: “I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices.

“But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses. Taking account of this, I have decided that from January 1st until March 2028 we will increase the Energy Profits Levy from 25 percent to 35 percent.”

Speaking on the windfall tax, he said: “The structure of our energy market also creates windfall profits for low-carbon electricity generation so, from January 1st, we have also decided to introduce a new, temporary 45 percent levy on electricity generators. Together these taxes raise £14billion next year.”

 

This comes after campaigners had long called for Mr Hunt to slap down a tax on the staggering profits raked in by energy giants, which left millions of Britons footing higher bills amid the energy crisis. 

Despite Mr Hunt’s windfall tax measure being able to shore up extra funds for the Treasury, the Chancellor still announced that Ms Truss’ energy price guarantee scheme will increase the £2,500 price cap for typical households from £3,000 for 12 months from April. 

Shadow Chancellor Rachael Reeves told the Commons, responding to Mr Hunt’s budget: “Billpayers will still see prices go up next spring, leaving far too many people wondering how they will make ends meet. For every pound of windfall tax left on the table, people are faced with higher prices on their bills. The Tories failure on energy goes back much further. They closed down gas storage, blocked onshore wind and solar and slashed support for home insulation. 

“Today the Chancellor says he will act on energy efficiency, but I’m afraid it is far too late.” 

Alexander Kirk, Campaigner, Global Witness, speaking exclusively to Express.co.uk, said that the windfall tax doesn’t go far enough.

He said:”It doesn’t go far enough and it allows for big tax loopholes as well, for instance if they invest in other oil fields or energy projects, but it is not very clear on where they need to invest to access those loopholes.

“There are enormous tax exemptions and the Government might not achieve its realised target anyway. They are raising the energy price cap as well. The End Fuel Poverty Coalition has said that 8.6 million people will be in fuel poverty due to the April changes from £2,500 to £3000, which is outrageous. 

“That will mean there will be the equivalent of 20 million people living in fuel poverty in the UK. The money isn’t going directly to help the most vulnerable, so we are quite disgusted by it as well. You will welcome the increase because there was talk of no increase, but it is not going to the right places.”

Alice Harrison, fossil Fuels Campaign Leader at Global Witness, added: “As the Chancellor battles with how to support people through a painful economic crisis, he needn’t look far for a huge pot of money – the extraordinary and eyewatering profits that the likes of BP and Shell have been enjoying over the past 12 months. This is a crisis caused by a dependency on fossil fuels and has benefitted those very companies to the tune of billions.”

 Former Prime Minister Liz Truss, who holds the record for being the country’s shortest-ever serving leader, had previously argued against a windfall tax, calling it “a Labour idea and all about bashing business and it sends the wrong message to international investors and to the public”.

But her Government later U-turned on the policy after the Business department announced it would step in with a “cost-plus revenue limit” for renewable and nuclear electricity generators in England and Wales.

This imposes a limit to how much the generators can make, “allowing generators to cover their costs, plus receive an appropriate revenue”. 

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Ed Miliband, the shadow climate and net zero secretary, said: “The Government has finally accepted the principle of Labour’s call for a windfall tax on excess profits of electricity generators. After months of telling the country they were utterly opposed to the principle of a windfall tax, they have been dragged kicking and screaming to implement it.”

This is a breaking story. More to follow.

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