British companies that serve oil and gas operators have issued an open letter urging the Prime Minister and Chancellor to push through a windfall tax.
There has been increasing political pressure on the UK government for a one-off additional tax to fund support for customers with higher energy bills.
In response, 31 organizations in the UK’s offshore energy supply chain have written an open letter calling for an end to speculation about such a tax.
These include manufacturing and technology companies.
Earlier, Prime Minister Boris Johnson said there would be more help to deal with the rising cost of living, but he was “not attracted” to the idea of new taxes in response to calls for a one-off levy on oil and gas companies to help troubled households to support.
The Treasury Department has refused to refer to a Financial Times report that Chancellor Rishi Sunak is considering a levy on the profits of power generators – including wind farms – and oil and gas companies.
Mr Sunak, like Mr Johnson, has expressed reluctance to go down the route of a windfall tax, but he has acknowledged the need to be “pragmatic” amid pressures on the cost of living.
In the letter, issued on Tuesday by trade body Offshore Energies UK (OEUK), which represents more than 400 companies in the sector, the signatories warn that the sector is only in the early days of a recovery after surging in the recent past suffered significant losses during downturns.
The letter states: “A one-off windfall tax on energy producers will not provide any lasting benefit to consumers and will only further reduce investor confidence in the UK, the effects of which will be felt for many years to come.
“And it will do nothing to address the cyclical nature of an energy system linked to global supply and demand, as the UK will become much less attractive to investors who will look elsewhere for the long-term stability they need to make large.” to advance energy projects.”
It also said any “surprise tax” carries the risk that operators – large or small – will scale back investment plans in response to what could impact jobs.
The letter states: “The impact of an investment freeze will be felt throughout the supply chain, through jobs and the communities this industry supports, both directly and indirectly.
“For the tens of thousands of jobs this industry supports, the long-term impact of a windfall tax will be even greater.
“This is in no small part because this follows a downturn that was particularly hard felt from the supply chain side of the industry, with thousands of manufacturing workers lost across the country.”
OEUK Chief Executive Deirdre Michie added: “Following significant downturns that have seen the offshore energy industry lose thousands of jobs, we need to encourage investment in cleaner energy and the sector that supports it.
“This industry is committed to supporting the country’s energy security, economy and net-zero ambitions – now is the time for us to work together to drive action.”
Pressure for a windfall tax came from Labor but also from some senior Tories.
A Treasury spokesman said: “We understand people are struggling as prices rise and while we cannot protect everyone from the global challenges we face, we are supporting UK families with a £22 billion support package, to get through the coming months.”
The 31 signatories are from: 3T Energy Group, Aker Offshore Wind, Apollo, Aubin Group, Baker Hughes, Bilfinger, Blade Energy Partners, Carjon-NRG, Dron Dickson, Exceed, Fennex, Global E&C, Halliburton, Hydrasun, ODE Asset Management, Offshore Water Management, Optimus Plus, PD&MS Group, Petrofac, Ponticelli, Prodrill Energy Resource Solutions, Semco Maritime, Stork, Subsea7, TechnipFMC, Tees Medical Services, Texo Group, Three60 Energy Group, Vysus Group, Wood and Worley.
https://www.independent.co.uk/news/uk/home-news/windfall-tax-rishi-sunak-cost-of-living-crisis-b2085894.html Windfall tax ‘won’t help’ cost of living amid crisis, energy companies say, while 31 Sunak urges dropping the idea