The clearest signal yet that a windfall tax might be imposed on energy companies has come from a Treasury minister who said the UK government “cannot rule out” such a move.
Amid reports that No 10 is holding out against plans by Rishi Sunak to introduce a levy, Tory figures have been weighing in for and against it.
In highly unusual public displays of dissent, a number of cabinet ministers have spoken out against the policy, in some cases framing their hostility in stark ideological terms.
Against
Sajid Javid The health secretary and former investment banker has made his opposition to the idea clear, saying his hostility is motivated by his core political beliefs. “Instinctively I don’t like it. I just think we’ve got to be really careful,” he told the Welsh Conservative conference.
Liz Truss The foreign secretary and torchbearer for the Conservative right admitted the UK was in a “very, very difficult economic situation” but said the Treasury should be cutting taxes rather than imposing a windfall levy on energy firms. “The problem with a windfall tax is it makes it difficult to attract future investment into our country, so there is a cost in imposing a tax like that,” she told Sky News.
Kwasi Kwarteng The business secretary firmly quashed the idea at the beginning of the month, days after it was mooted by the chancellor. Asked if he backed Sunak’s idea, he told Sky News: “I’ve never been a supporter of windfall taxes. I have been very clear on that publicly, I think it discourages investment and the reason why we want to have investment is because it creates jobs, it creates wealth and it also gives us energy security.”
Brandon Lewis The Northern Ireland secretary has said a windfall tax “sounds attractive but doesn’t work”. He said: “It puts off investment both in that sector and, absolutely, the risk in others,” he told the Daily Telegraph.
Suella Braverman The attorney general drew on her ideological worldview when she criticised the idea of a levy in an interview with Conservative Home. “I don’t think a windfall tax would be a great idea, if I’m honest. I think that we want to incentivise investment. Profits are not an enemy of Conservatives. Profits mean more investment. Profits mean more research. Profits mean more jobs,” she said.
Jacob Rees-Mogg The Brexit opportunities minister warned against the idea that business was, as he put it, a “honeypot” that “you can just raid whenever you feel like”. He said: “Retrospective taxation is difficult because you are changing the understanding of what people do when they invest.”
Dominic Raab Taking aim at opposition calls for a windfall tax, the deputy prime minister described the idea as “frankly ill thought through”. He told Sky News: “If you look at Labour’s policy of a windfall tax, that would damage investment in energy supplies we need and hike bills. It’s disastrous. It’s not serious.”
On the fence?
Boris Johnson The prime minister refused to rule out a U-turn to impose windfall tax on energy firms earlier this month. “The disadvantage of those sorts of taxes is that they deter investment,” he said in an interview on LBC, before adding “we’ll have to look at it” when it was put to him that energy bosses had said such a levy would not deter them from putting money into new technology. He said: “I don’t like them. I don’t think they are the right way forward. I want those companies to make big, big investments.”
Potentially for
Rishi Sunak The chancellor has said he is “pragmatic” about the idea of a windfall tax on energy companies, claiming “no options are off the table”. In a Q&A session with Mumsnet in April, he said he feared the plan would put off investment in new oil and gas extraction. However, he added: “If we don’t see that type of investment coming forward and companies are not going to make those investments in our country and energy security, then of course that’s something I would look at and nothing is ever off the table in these things.”
Simon Clarke The chief secretary to the Treasury said he was not “philosophically attracted” to the idea of a windfall tax, but he appeared to be laying the ground to support it. “The sector is realising enormous profits at the moment,” he told LBC. “If those profits are not directed in a way which is productive for the real economy, then clearly all options are on the table. And that’s what we are communicating to the sector, that we obviously want to see this investment, we need to see this investment.”
