Rishi Sunak announces £5bn windfall tax on energy firms
Rishi Sunak has succumbed to pressure to do more to tackle the cost of living crisis and announced a £5bn windfall tax on energy companies, calling it a “temporary, targeted energy levy”.
“The oil and gas sector is making extraordinary profits, not as the result of recent changes to risk taking or innovation or efficiency but as the result of surging global commodity prices driven in part by Russia’s war.”
As a a result, he said he was “sympathetic” to the idea of taxing these profits fairly, but had found a sensible middle course: a “temporary, targeted energy profits levy” of 25%, but with 90% tax relief for firms that invest.
He also said he was “urgently evaluating” the scale of excess profits made by electricity generators.
Making clear the proceeds of the new tax would be used to fund help for households, Sunak told MPs “the high inflation we are experiencing now is causing acute distress for the people of this country”. Annual inflation hit 9% in April: the highest rate for 40 years.
He said the public would understand ministers could not offset all of the increase in prices. But he said “this government will never stop trying to help people”, adding: “We will get through this.”
Sunak said spending measures to tackle the crisis had to be “timely, temporary and targeted” to avoid stoking inflation.
He was setting out the plans just two months after giving a Spring statement that was criticised across the political spectrum for failing to do enough for the poorest households.
His announcement came after the energy regulator Ofgem warned earlier this week that the price cap limiting household bills was likely to rise by a further £800 on October, following a £700 increase in April.
Several cabinet ministers including energy
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