Extending windfall tax on energy firms was ‘difficult decision’, says Chancellor

Chancellor Jeremy Hunt has conceded his decision to extend the windfall tax on oil and gas firms is “difficult” for Conservatives in north-east Scotland.

However, he insisted increasing the lifetime of the energy profits levy by a further 12 months until 2029 is the “right thing for all the country”.

His comments came after Scottish Conservative leader Douglas Ross and UK Government energy minister Andrew Bowie – who is the MP for West Aberdeenshire and Kincardine – both branded the move outlined in the Budget “deeply disappointing”.

Mr Ross said he will “fight tooth and nail” against the move, and vote against it when it comes before Parliament.

“The more energy companies are taxed, the less they will have to invest in managing the transition to net zero and the creation of further Scottish jobs.

“I want our energy policy focused on the long-term, rather than just the here and now. I share the frustration of major employers in the north-east that the one-year extension is unhelpful and hinders their investment planning.

“That is why I will not vote for an extension when it comes to Parliament.”

He added that as high oil and gas prices had “lasted longer than was anticipated at the start of the Ukraine war”, energy firms are making “additional profits they weren’t expecting to make”.

The energy profits levy charges oil and gas companies an extra 35% tax on the money they make in the UK, with its extension expected to raise another £1.5 billion for the Treasury.

Mr Hunt said: “I think it is a fair contribution given the scale of the unexpected profits they have had.”

He said the UK Government still “strongly supports the oil and gas industry”, but added: “I also had to be fair looking at the public finances, looking at the fact that I have spent, taxpayers have spent, £94 billion in cost-of-living support, helping pay around half people’s electricity bills over the last winter, and reflecting the fact that because high oil and gas prices have lasted longer than was anticipated at the start of the Ukraine war, they are making additional profits they weren’t expecting to make.”

Insisting the decision to extend the levy “was the right thing for all the country”, Mr Hunt added: “The big dividing line here is between the Conservative Party and the Labour Party.

“The Labour Party have said they will remove the very generous allowances that oil and gas companies have. That will basically stop their activities in their tracks, Labour want to stop all North Sea oil and gas exploration for very ideological reasons, it makes absolutely no sense at  all.

“We don’t. We have taken a difficult decision because of it being the right thing for our national finances, but the difference is we support that industry.”