Yahoo Finance Rishi Sunak threatens oil and gas giants with windfall tax on profits
Rishi Sunak on Wednesday night threatened energy companies with a windfall tax on their profits unless they "support the economy" by increasing investment in UK energy supply.
The Chancellor said that, unless big firms do more to protect energy security, levying a windfall tax was "something I'd look at".
The comments came in a question and answer session with users of the Mumsnet website in which Mr Sunak – who has faced recent controversy over his family's multi-million pound fortune – urged them not to "judge him" by his bank account.
His comments suggest a split at the top of the Government – hours earlier, Boris Johnson had described the idea as a "tax on business" at Prime Ministers Questions, while Dominic Raab called a windfall tax "disastrous" and "damaging".
Mr Johnson asked for ideas on how to save money for households on Tuesday. Cabinet ministers suggested relaxing rules on how many children can be cared for by nursery staff and allowing MOTs to be held every two years rather than annually.
The Chancellor has previously rejected Labour proposals to levy a windfall tax on the surging profits of energy firms, buoyed by high oil and gas prices.
However, there is growing concern over Russian threats to cut off gas supplies to Europe and soaring energy bills, with the average household paying nearly £700 more for gas and electricity this year.
Asked about the prospect of taxing energy firms' profits to ease the cost-of-living crisis, Mr Sunak replied: "If we don't see that type of investment coming forward, if companies aren't going to make investments in our energy security, of course that's something I'd look at."
Treasury sources said the Chancellor's comments were intended as a "warning shot" to oil and gas firms to start investing significant sums in the UK "soon".
On Wednesday, the European Union appeared split over how to respond to Russian "blackmail" to pay for gas imports in roubles, after Gazprom halted deliveries to Poland and Bulgaria in a row over payments.
Western governments want to deny Russia any territorial gains from its invasion of Ukraine, officials have said in the clearest indication yet of the scale of the defeat they want to impose on Moscow.
The remarks by Mr Sunak are the first indication from the Treasury about how it plans to help families likely to be hit by soaring household energy bills when the new price cap is set in October.
Mr Sunak was urged at this week's Cabinet meeting to cut taxes to help families with the cost-of-living crisis.
Labour has been calling for a one-off windfall tax imposed on excess profits made by companies such as BP and Shell from soaring oil and gas prices. Spain has already announced such a tax.
The party has proposed a 10 per cent increase on corporation tax for North Sea oil and gas producers to raise £1.2bn to help households struggling with a 54 per cent hike in energy bills this month.
Pointing to Shell's announcement that it will invest £25 billion in the UK over the coming years, Mr Sunak said it was an "enormous investment that's great for the economy and British jobs and families".
He said he wanted more UK investment "to improve our energy security so we're not reliant on importing" more expensive energy from abroad, which can drive up household bills.
The chancellor added that he was loath to impose a tax that might choke off further investment but warned that unless other companies followed suit he may have to impose a windfall tax.
He said: "Nothing is ever off the table in these things. Right now, what I believe is the right thing to do is to encourage these companies to invest so that we have more energy security and support the economy."
Mr Sunak also strongly hinted that he would do more to help families if there is another sharp jump in household bills in October, when the energy price cap is expected to rise again.
He said: "I have always been clear from the beginning – we will see what happens and then, depending on what happens to bills, of course if we need to act and provide support for people then we will.
"It would be silly to do that now or last month or the month before when we don't know exactly what the situation in the autumn is going to be."
Mr Sunak was criticised by Mumsnet users for being out of touch with families living on a budget. One told him she "could not imagine what it is like to live your very privileged financial position. How can you have the understanding and empathy of what it is like to struggle?"
Another, who is in her 30s and expecting her first child, told the Chancellor they were worried about having a baby given the current economic climate.
Mr Sunak, who is said to be personally worth £200 million after a career as a hedge fund manager, pleaded to be judged on his work, not his wealth.
He said: "I hope people can judge me on my actions, I don't judge people on how much money they have in their bank account.
"I didn't start like this. My grandparents emigrated here with very little, built a life for themselves, and my parents carried that on and wanted to work hard to give me and my brother and sister a better life.
"That was how I was raised and how I was brought up – and now I am in a fortunate position. But I didn't start like that. That is not how my family started. I never forget the values I was raised with. I then try to express those values through the work I do in this job."
He said his concern about possible soaring mortgage interest rates was the reason why he opposed borrowing more to pay for additional government spending, adding: "I'm really conscious I don't want mortgage rates to go up any more than they're already going up."
