The UK Government believes a windfall tax on energy companies would kill off investment and cost jobs, Energy Minister Greg Hands has said.
He also said the Scottish Government’s opposition to new nuclear power stations is preventing it from being part of a “renaissance” of the sector.
Addressing Holyrood’s Net Zero Committee yesterday afternoon, one MSP responded to his comments on a windfall tax by saying the cost-of-living crisis is “killing off people”.
Hands said world events had driven up energy prices and the UK Government is not able to completely insulate consumers from this, adding that Westminster is spending £22bn this year to help households with the cost of living.
Some of this help - such as the Energy Bills Support Scheme, which will provide a £200 reduction in electricity costs - will not be felt until October, he said.
The Conservative minister said: “It’s very much the belief of the chancellor - matters of taxation are matters for the chancellor - that a windfall tax would kill off investment.
“For example in the North Sea and particularly from companies that are also using those proceeds to invest increasingly in renewables.
“Oil and gas companies already pay corporation tax at twice the rate of other companies, they’ve paid around £375bn in taxation to the Exchequer since North Sea oil and gas came on stream.
“So we take the view that the windfall tax would be likely to kill off investment and cost jobs, particularly in Scotland.”
Scottish Labour MSP Monica Lennon responded: “Instead of killing off investment, just to quote your words back, what we’re hearing from charities, trade unions in Scotland, local volunteers and food banks is that the cost-of-living crisis is killing off people.”
She asked about the proposed Jackdaw oil field in the North Sea, to which the minister said an independent environmental assessment is being carried out.
Increased investment in gas will help with the UK’s security of supply, Hands replied.
Scottish Conservative MSP Liam Kerr asked if there is a case for wholesale restructuring of the energy market.
Hands said the UK Government is looking to change the UK’s energy mix, increasing the move to renewables and nuclear power. “It would be really helpful if the Scottish Government were to drop its ideological opposition to nuclear, because nuclear has got a fantastic track record in Scotland.
“It’s a pity to see Scotland not participating - thanks to the Scottish Government’s approach to nuclear - in our nuclear renaissance.”
SNP MSP Jackie Dunbar later commented on Hands’s evidence to the committee, stating: “The minister’s appearance at committee was pathetic, it provided no reassurance to families across Scotland who are terrified to open their bills right now and having to make the unthinkable decision between heating and eating.
“This is a cost-of-living crisis created by the Tory government and due to their continued inaction, families in Scotland are slipping further and further into poverty.
“It also illustrates the shambolic response from the UK Government as Boris Johnson tells MPs support is on the way, but that is then denied by the Treasury and Greg Hands at Holyrood.”
Despite the UK Energy Minister's opposition to a windfall tax, the Chancellor Rishi Sunak has threatened to hit energy companies with such a one-off tax if they don't invest enough in new projects.
In an interview with the BBC, he said he was not "naturally attracted" to the idea of a windfall tax, but he was "pragmatic" about introducing one.
Meanwhile, speaking to LBC radio, Prime Minister Boris Johnson said the UK Government would "have to look" at the proposal if not enough investment was made.
Treasury officials have been ordered to examine a potential tax, a BBC source said.
Labour, the Liberal Democrats and the SNP are all calling for a windfall tax on their profits to pay for tax cuts and benefit boosts, to help households cope with rising living costs caused by spiralling inflation.
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