Jeremy Hunt's Autumn Statement Increases Windfall Tax On Energy Firms

The chancellor said it would raise £14bn next year.
Stefan Rousseau via PA Wire/PA Images

Jeremy Hunt has increased the windfall tax on oil and gas giants from 25% to 35% and expanded the levy to electricity generators.

It came as the chancellor £55bn in tax rises and spending cuts designed to repair the damage done by the government when Liz Truss was prime minister.

Hunt confirmed in his autumn statement on Thursday the tax on North Sea oil and gas operators will rise and be extended by two years until 2028.

Electricity generation companies will now be brought into the scheme and be hit with a windfall tax of 45%.

Speaking in the Commons, Hunt said the measures would raise £14bn for the Treasury next year to help fund support for people’s energy bills.

“I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices,” he said.

“But any such tax should be temporary, not deter investment.”

The windfall tax gets its name as it targets excess profits firms had not expected to make or were necessarily responsible for.

The move is a sharp change in direction from Truss’s administration which said it was “wrong” to make energy giants pay more tax.

It came as the Office for Budget Responsibility (OBR) said the UK economy was already in recession and set to shrink by 1.4% next year.

The watchdog said it expected UK gross domestic product (GDP) to slump as it significantly downgraded previous projections that the economy would actually grow by 1.8% in 2023.

The £55bn is the extra money needed by the government in order to meet self-imposed targets to bring down the size of state debt relative to national income.

The announcement comes a day after inflation rocketed to a 41-year-high of 11.1% in October due to surges in the cost of energy and food.


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