Energy owners ‘gobsmacked’ as Treasury sets sights on renewables windfall on excess profit

Treasury 'softening up' on windfall tax position says Cohen

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Rishi Sunak is reportedly mulling over plans to introduce a wider windfall tax on oil and gas producers and electricity generators. The Chancellor even instructed Treasury officials to work on measures which could raise up to £10billion of excess profits made by electricity generators, including renewable energy operators such as wind farms.

Such a move would go far beyond Labour’s plan, which Rachel Reeves told in March could raise up to £3billion.

However, ITV’s political editor Rober Peston revealed that many energy owners were left “gobsmacked” by reports.

Writing on Twitter, Mr Peston said: “I’ve spoken to investors and owners of wind and nuclear, and they are incredulous – gobsmacked – that the treasury is looking at a windfall tax on their current excess profits, given the PM’s desire to bring in tens of billions of pounds of incremental investment in renewables and green energy.

“They point out that they have choices about where they invest, and if the tax on investments in offshore wind is more predictable and stable in Dutch waters, that is where their cash will go – as just one example.

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“One investor said ‘the Treasury is making it up as it goes along. To call it chaotic is to be generous’.”

The news comes after the energy regulator Ofgem warned the price cap will surge to £2,800 in October.

Jonathan Brearley, chief executive of Ofgem, told MPs on the BEIS Committee: “The price changes are genuinely a once in a generation event not seen since the oil crisis in the 1970s.”

A windfall tax has caused quite a stir around the Cabinet, with many of the Chancellor’s colleagues strongly opposing the move.

The Brexit-backing Business Secretary Kwasi Kwarteng suggested the move could even hamper the UK’s net zero ambitions.

When asked about the prospect, Kwarteng told a Westminster committee: “We’re asking the generators to deploy record amounts of capital to build the infrastructure we need to hit the net-zero target.

“I think, again, [a tax on them is] a challenging proposition.”

The Spelthorne MP previously told Sky News: “He is the Chancellor of the Exchequer, he is responsible for tax policy.

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“From my point of view, I want to see investment in the North Sea.”

Mr Kwarteng added: “My view is that, and I’ve said this publicly many times, a windfall tax will act as a disincentive to invest and we want to see investment.”

However, Boris Johnson is expected to unveil a new package to help penny-pinching Brits deal with the cost of living crisis.

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