Fall statement: Jeremy Hunt outlines windfall plans
Chancellor Jeremy Hunt has announced a major increase in taxes on energy giants’ profits, to be increased from 25 percent to 35 percent through 2028, as the Treasury scrambles to raise funds to protect households from rising costs of gas and electricity. According to Hunt, the windfall tax should not deter investment, which is one of the main reasons why the previous cabinet was hesitant to increase the Energy Profits levy.
Hunt has announced an increase in windfalls (Image: HEAVEN)
The head of the treasury also announced that electricity producers must also pay a new temporary levy of 45 percent. Together with the windfall tax, he said the combined measures could raise as much as £14bn next year.
Speaking to the House of Commons on Wednesday at the unveiling of the autumn budget, Hunt said: “I have no objection to windfalls if they are really about windfalls caused by unexpected increases in energy prices.
“But such a tax must be temporary, not deter investment and recognize the cyclical nature of many energy companies. Taking this into account, I have decided that from January 1 to March 2028 we will increase the Energy Profit Tax from 25 percent to 35 percent.”
Speaking about the windfall tax, he said: “The structure of our energy market also creates windfalls for low-carbon electricity generation, so from January 1 we have also decided to introduce a new, temporary 45 percent levy on electricity generators. Bringing these taxes together £14 billion next year.”
This comes after campaigners have long called for Mr Hunt to impose a tax on energy giants’ staggering profits, forcing millions of Britons to pay higher bills amid the energy crisis.
Ahead of Mr Hunt’s announcement, Alexander Kirk, campaigner, Global Witness said: “We are counting on the Chancellor to do his very best to help those most in need. Shell’s £31bn in additional profits would be a bitter pill to swallow to be taken for many if a proper windfall tax is not introduced Such a tax should close all tax loopholes and fail to protect companies like Shell
“To avoid situations like the one in Orkney where residents living next to a wind farm continue to pay for their electricity, the government must now take decisive action to address the energy crisis, our potential for wind and wave energy, and re-imagine how our energy markets are working. Britain also needs national home insulation.” scheme to support people in the future.”
Alice Harrison, Fossil Fuels campaign manager at Global Witness, added: “As the Chancellor grapples with how to help people through a painful economic crisis, he doesn’t have to look far for a huge pot of money – the extraordinary and eye-popping profits that the likes of BP and Shell have enjoyed the past 12 months.This is a crisis caused by a dependence on fossil fuels and has benefited those very companies for billions.”
Former Prime Minister Liz Truss, who holds the record as the country’s shortest-serving leader ever, had previously argued against a windfall tax, calling it “a Labor idea and all about business bashing and it sends the wrong message to international investors and to the public”.
But her government later backtracked on the policy after the business department announced it would step in with a “cost-plus-revenue cap” on renewable and nuclear electricity generators in England and Wales.
This puts a limit on how much the generators can make, “allowing generators to cover their costs, plus receive an appropriate income”.
Ed Miliband, shadow climate secretary and net zero, said: “The government has finally accepted the principle of Labour’s call for a windfall tax on electricity generators’ excess profits. After months of telling the country that they were completely against the principle of a windfall tax, they were dragged kicking and screaming into introducing it.”
Despite the windfall from Mr Hunt’s tax measure being able to raise extra money for the Treasury, the Chancellor still announced that Ms Truss’ energy price guarantee scheme will lift the £2,500 price cap for typical households from April for 12 months. raising £3,000.
Simon Francis, coordinator of the End Fuel Poverty Coalition, told Express.co.uk that £14bn would be needed to solve fuel poverty this winter. This is the same amount of money that Hunt says will be raised by the windfall tax and the electricity generator tax.
He said: “The cost of solving fuel poverty this winter is an additional £14bn in support for those households most in need. Any figure below this number will condemn 7 million households to fuel poverty. the energy price cap from April next year, millions more will join them.
“We are already seeing the horrific effects of living in cold, damp homes on children, the elderly, the disabled and those with illnesses ranging from cancer to asthma. Without the financial support to help people stay warm this winter, we are deeply concerned that the NHS will be overwhelmed and millions will suffer.”
This is a breaking story. More to follow.