Energy companies could face a windfall if they don’t reinvest their huge profits, said a minister who acknowledged the “extraordinary pressure on family finances”.
Simon Clarke, chief secretary of the Treasury, told Sky News’ Kay Burley that imposing such a levy cannot be ruled out and that “all options are on the table”.
It seemed the government’s strongest hint yet that a windfall tax, first proposed by Labor and to be used to offset rising energy bills, could be passed.
Political hub: increase investment or face one-off charges, energy companies said
However, it is clear that the prime minister and other cabinet members have yet to be convinced.
Mr Clarke told Sky News’ Kay Burley that the government recognized the “real challenge for households across the country”, which is likely to worsen again in the fall when the energy price ceiling rises again.
He added: “As far as the concept of a windfall tax itself, we are very clear that there is a real need at a time when the industry is making very significant profits to reinvest those profits in new offshore installations – to get more out of it.” the North Sea, which is of course vital for energy supplies, but also good for jobs and the economy in general.
“If we don’t see that investment come to fruition, it’s very clear that all options are on the table.”
The comments come after Jesse Norman, the former Chancellor of the Exchequer, became the last Tory MP to embrace the idea of a windfall given the “extraordinary times” arguing that Mrs Thatcher “in her pragmatic prime” would have backed it.
George Osborne, the former chancellor, told Channel 4’s Andrew Neil show on Sunday that he believed Rishi Sunak would eventually.
Mr Clarke’s comments on the option not off the table are in line with those previously made by Mr. Sunak and other ministers.
It comes at a time when energy companies are making huge profits thanks to rising oil and gas prices, even as that surge is straining household finances — largely responsible for pushing inflation to its highest level in four decades.
What is a windfall tax, how much are oil companies already paying and has the UK tried it?
Mr Clarke told Sky News that Mr Norman had made a “very strong point” about the idea of a windfall.
“We’re certainly not ruling it out,” he says.
“I am never instinctively drawn to raising taxes to the extent that it threatens to discourage investment in new capacity and new jobs – but these are extraordinary circumstances, we recognize there is extraordinary pressure on family finances, and the industry needs to hear the message loud and clear.
“If there is no investment, we cannot rule out the possibility of having to do a windfall tax.
“We are not making an announcement at this time, but we are not ruling it out.”
If the companies do not make the necessary investment in the North Sea, it would mean that they are “basically just banking the profits and doing nothing to justify them,” said Mr Clarke.
“These are basically one-time and extraordinary benefits to the industry,” he added.
Labor leader Sir Keir Starmer last week accused the prime minister of dithering on imposing a windfall — a policy he suggested the government will eventually have to adopt.
splits have emerged between Boris Johnson and Mr Sunak on the proposal.
Sky News understands that Mr Sunak considered it futile that Tory MPs were ordered to vote against the policy in the House of Commons.
Abena Oppong-Asare, Labour’s shadow finance minister at the Treasury, called for greater urgency.
She told Sky News that her constituents couldn’t afford to take the bus to the food bank or the job center.
“I was disappointed to hear from Simon Clarke that they were waiting to see from the gas companies in showing leadership in this area… she said.