British Gas owner says windfall tax will dent investor confidence

theguardian.com:

The British Gas owner, Centrica, has warned that Rishi Sunak’s windfall tax will “damage investor confidence” as Britain attempts to build up green energy supplies.

The Centrica chairman, Scott Wheway, and its chief executive, Chris O’Shea, hit out at the chancellor’s 25% levy on oil and gas operators’ excess profits, which will be used to pay for measures to reduce soaring energy bills.

Centrica – Britain’s biggest energy supplier – reported that its annual operating profits doubled to £948m in 2021, aided by a surge in earnings from its North Sea oil and gas arm. It expects to make a healthy profit again this year.

Sunak hopes to raise £5bn from the tax, but a debate is raging over the structure of the levy. An investment allowance within the tax allows energy firms to make 91p of tax savings for every £1 spent.

Labour has labelled the allowance a “gigantic get-out clause” while analysts believe £8bn of oilfield projects could soon get the green light as a result of the measure.

Speaking at Tuesday’s annual shareholder meeting in Leicester, Wheway said: “We’ve got every empathy with the plight of many customers presently, that are facing difficulties in managing their energy bills, and we welcome action to help those customers.

“But we also share a lot of concern around choices that may be made to apply taxes to energy production, which – although they may derive short term benefits – can cause medium and long term problems, because we know that the industry that we’re in is a very long term industry. And we’d urge everyone thinking of those things to strike the right balance.”

O’Shea waived his £1.1m bonus last year as the company cut its dividend while household bills ballooned. He was paid £875,000 in salary and benefits.

E