Windfall taxes on energy companies could be raised to 30 per cent and extended as much as three years, as Downing Street to scrambles to fill a £40bn black hole in the UK’s finances.
The new Government is eager reassure markets after former Prime Minister Liz Truss’ botched mini-budget.
In this vein, Chancellor Jeremy Hunt is considering hiking the Energy Profits Levy up to five percentage point, according to The Times, which would potentially raise billions of pounds in extra revenue,
This would be on top of the £25bn it had been due to bring in over the next three years.
The tax could also be extended until 2028, extended beyond its current sunset clause of 2025.
Internal government predictions suggest oil and gas prices will not return to normal levels for the rest of the decade.
Officials have also been working on plans that would extend the levy beyond oil and gas companies to electricity generators.
Last month, the previous administration proposed revenue caps, known as the cost-plus-revenue limit – however. it’s future is now uncertain
While no final decisions have been taken on the November 17 budget, The Times understands Hunt and Prime Minister Rishi Sunak are receptive to the proposals.
Labour has also pushed for the windfall tax to be expanded, calling for the levy being backdated to January 2022 and for investment relief to be removed.
Last week Shell unveiled global profits of $9.5bn (£8.1bn) in the third quarter – with BP also set to unveil bumper profits today.
Chevron, Equinor, and Exxon Mobil have also revealed bumper profits in recent days.
Industry body Offshore Energies UK has warned against further destabilising the investment climate for new projects – which it regards as crucial to maintaining the North Sea’s role in producing oil and gas.
It has calculated that the Britain produces around 45 per cent of its gas domestically – and relies on Norway as its chief overseas partner, which meets 38 per cent the country’s gas needs.
The Climate Change Committee, Westminster’s independent advisory group, predicts half of the UK’s energy requirements between now and 2050 will still be met by oil and gas, and as much as 64 per cent of UK energy needs between 2022 and 2037.
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Government looking at proposals to expand windfall taxes