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Treasury Minister "Definitively" Not Ruling Out Windfall Tax As Pressure Builds On Government To Act

3 min read

Another minister has left the door open to a windfall tax on major energy companies as pressure grows on the government to spell out how it will help households through the cost of living crisis.

Simon Clark, the chief secretary to the Treasury, said this morning that ministers were "definitively not ruling it out" despite not being "philosophically attracted" to the proposal.

"We're not at this point making any announcement, but we're definitively not ruling it out," he told Sky News.

The government is facing growing calls to impose a one-off tax on the profits of major oil and gas companies that operate in the North Sea, and use the money raised to help fund further support for households as energy bills rise, and inflation hits a 40-year high.

Ministers were previously against the move, arguing it would deter investment.

However, their position has softened in recent days amid significant pressure, including from Conservative MPs, to take more drastic action to help people with cost of living pressures.

Clarke said the government could impose a windfall tax on those major energy companies if they don't "step up to its part of the bargain" and increase investment in domestic energy production.

Ministers have prioritised the ramping up of domestic production in response to Vladimir Putin's invasion of Ukraine.

"We have always said to the industry, and this was something that was communicated loud and clear back in early spring shortly after the Russian invasion, that we need to see the industry step up to its part of the bargain and invest in North Sea delivery," Clarke explained. 

"If that doesn't happen, they are in effect just banking the profifts and not doing anything to justify those. These are one-off and extraordinary gains for the industry.

"The chancellor is very clear: we are not philosophically attracted to this, but if the situation doesn't improve in terms of them stepping up to the plate, then we can't rule it out."

PoliticsHome reported over the weekend that there was a widespread feeling among Conservative MPs that a major government U-turn was coming on the question of a windfall tax.

Last week, every single Conservative MP voted against a Labour amendment to the Queen's Speech which called for a windfall tax after being instructed to do so by government whips.

Any government decision to make more support available to households is expected to be announced as a fresh package before parliament breaks up for its summer recess in late July.

Prime Minister Boris Johnson and Chancellor Rishi Sunak are set to meet this week to discuss what they could potentially include in a fresh package of measures, PoliticsHome understands.

Speaking at the Welsh Conservative party conference on Friday, Johnson said he could not "magic away" the rising cost of everyday items, but insisted that the government was ready to "put our arms around people" like it did during the coronavirus pandemic.


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