Chancellor Rishi Sunak has announced that oil and gas companies will get a big tax cut if they extract more fossil fuels in the UK, as he set out measures to help people with the cost of living crisis.
Chancellor Rishi Sunak has announced that oil and gas companies will get a big tax cut if they extract more fossil fuels in the UK, as he set out measures to help people with the cost of living crisis.
Having for weeks refused to impose a windfall tax on the profits of energy companies, Sunak was forced into a U-turn by the Labour Party, announcing that the government will announce a levy to help tackle rising bills.
The temporary targeted energy profits levy will amount to 25% on profits of oil and gas firms but will be phased out when prices return to normal.
While announcing his levy, which the chancellor said would ‘tax extraordinary profits fairly and incentivise investments’, Sunak also included in his proposals a new ‘super-deduction’ style relief to encourage firms to invest in oil and gas extraction in the UK.
It added: “The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest – providing them with an additional, immediate incentive to invest. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax they will pay.”
Wouldn’t it make sense at a time of climate emergency to stop subsidising fossil fuels and invest in insulation and renewables?
As part of his support package Sunak also announced a £400 discount on energy bills for all and a £650 one-off payment to the poorest eight million households. Eight million pensioners who get winter fuel payment to also get a £300 payment.
While additional measures to help people struggling with the fastest fall in living standards since records began are welcome, they still only amount to a sticking plaster. No doubt some of the extra money will help but won’t fully shield families and the most vulnerable struggling with rocketing energy bills.
The chancellor also thus far refuses to raise benefits in line with inflation which would help some of the most vulnerable.
Basit Mahmood is editor of Left Foot Forward
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