Rishi Sunak has ordered officials to draw up plans for a possible windfall tax on more than £10billion of excess profits by electricity generators, including wind farm operators.
The Financial Times reports today that Treasury officials are working on a scheme that would go well beyond Labour’s original windfall tax plan, the said.
Asked to comment, a Treasury spokesperson did not specifically respond to the article.
Sunak and Prime Minister Boris Johnson urgently want to set out measures to address rising energy bills and how to pay for them, FT said, citing unidentified officials, adding that an announcement could come this week or after the Jubilee bank holiday in early June.
It comes as the UK Government finds itself under increasing pressure to impose a windfall levy on oil and gas firms, in a bid to ease a cost-of-living crisis driven in part by rocketing energy prices.
It has so far resisted the calls, though both the chancellor and Business Secretary Kwasi Kwarteng have said they expect to see energy firms spending and investing in the UK.
Harbour Energy and Eni became the latest to respond yesterday, announcing plans to invest more than £8billion in the UK over the next four years, as the sector continues to bat away calls for a windfall tax on energy profits.
Eni is said to intend to invest £2.1billion over the next four years, while Harbour has a reported £6billion earmarked for further North Sea upstream activity over the next three years.
The commitments follow similar pledges made by the likes of BP, Shell and Ithaca in recent weeks.
Protest threat
Meanwhile environmental activists and protesters could undermine the UK's energy security and risk making it far harder for the nation to reach its net zero target, an Aberdeen conference will hear today.
The warning will come in a keynote speech by Deirdre Michie, chief executive of Offshore Energies UK (OEUK).
She is to say that protests, legal action and publicity stunts by organisations including Extinction Rebellion, Just Stop Oil and Greenpeace may deter offshore investment in the UK waters and set back the UK's efforts to cut emissions.
She will emphasise the importance of oil and gas-derived energy and products to the UK economy and the country's consumers.
Britain currently has:
- 32million vehicles that burn petrol or diesel.
- 24million homes that rely on gas boilers for heat and hot water.
- 35 gas-fired power stations that it relies on for 40% of its electricity.
The chief executive will warn that, until the UK replaces such infrastructure, it will continue to need oil and gas. Currently, the UK gets 75% of its total energy from these fuels.
In her speech, she is to say: ""Of course, we do have a choice as to where that oil and gas comes from. We could cut UK production and increase imports - intensifying our reliance on other countries. But as the Ukraine crisis shows, that's not a great option.
"Or we could, instead, choose to invest in the oil and gas resources in our own backyard.
"The vision of the pressure groups to block all oil and gas developments in UK waters would do nothing to cut consumption or emissions. Both are driven by how most of us live our lives.”