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The Government will raise an extra £14bn next year by raising the windfall tax, Jeremy Hunt has announced. In his first autumn statement as chancellor he said the energy profits levy, as the tax is known, would rise from 25% to 35%. The move follows months of pressure from Labor for ministers to raise more money from the oil and gas giants. Mr Hunt told MPs he had “no objection” to the tax windfalls if they were really windfalls caused by unexpected increases in energy prices. “But any such tax should be temporary, not deter investment and recognize the cyclical nature of many energy businesses,” he said. He also announced an unexpected 45% tax on electricity generators. The move means wind farms in UK waters will pay a higher windfall tax than nearby oil and gas rigs. Together the two taxes will raise £14 billion next year, Hunt said. Announcing his plans he told MPs that the OBR believes the UK is in recession. He said it offered a “balanced path to stability” which involved “making difficult decisions”. But “anyone who says there are easy answers is not being honest with the British people: some support spending cuts, but that would not be compatible with high-quality public services.” His first job had to be to tackle inflation which “eats the pound into people’s pockets even more insidiously than taxes”, he said. But shadow chancellor Rachel Reeves said that after months of resistance, the government had “finally crawled kicking and screaming to extend the tax windfall that Labor first called for in January”. “The Government has announced plans for next year’s energy bills, but ratepayers will still see them rise next spring, leaving too many people wondering how they will cope. For every pound of tax windfall left on the table, workers are being forced to pay the price,” he said. Finance Minister John Glenn later said he “did not accept” that the government had replicated Labor’s policy on the windfall tax. Greens MP Caroline Lucas welcomed the higher windfall tax but said it was “scandalous” that the chancellor had “kept the investment allowance, giving a huge subsidy to obscenely rich oil and gas companies”.
