Government Pressured To Reduce The Tax On Business Energy

At the beginning of the week, opposition parties and some Conservative MPs pressured the government to levy a one-off windfall tax on UK offshore oil and gas companies.

Pressure from opposition parties comes weeks after Bernard Looney, boss of British Petroleum (BP), announced the recent energy crisis and high prices had transformed British Petroleum into a “cash machine”.

Whilst industry leaders claimed a one-off windfall tax on UK oil and gas operators would cause “irreparable damage” to the sector, many have argued that comments such as Looney’s highlight the industry’s robustness.

Indeed, Looney’s comments have been reflected across the sector. Serica Energy, an operator responsible for 5% of the UK’s gas production, announced that shareholders should expect “very significant returns” because of the record cost of gas.

Whilst the crisis has led to a windfall profit for oil and gas operators, for domestic and business consumers, the crisis has pushed many into fuel poverty and applied unprecedented pressure on businesses.

Despite calls from opposition parties and those within their own party, the Conservative Government has refused to entertain a windfall tax. Nadhim Zahawi, the Education Secretary and former oil industry executive, stated, “What Labour are putting out just doesn’t add up. A windfall tax on oil and gas companies that are already struggling in the North Sea is never going to cut it.”

Labour has responded by forcing through a vote this afternoon that would seek to help businesses deal with rising energy prices and business energy tax. The vote will call for the government to scrap business rates, reduce the debt burden that firms are facing and create a £600m contingency fund.

Continued pressure from opposition parties has been emboldened by increasingly unhappy and vocal Conservative MPs who have called for support for households hurting over the rising cost of energy bills.

Chris Skidmore, former Energy Minister and Conservative MP for Kingswood, commented, “A windfall tax, whether you call it that or you want to call it a carbon tax – [what] I would rather talk about is how we achieve a carbon tax for the future – is absolutely, I think, the right way to go.“

The vote this afternoon will be watched keenly by both domestic and business consumers alike.

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