Rishi Sunak is preparing to impose a windfall tax on North Sea oil companies to help consumers with the cost of living crisis.
The under-fire Tory chancellor has reportedly asked officials to look at the Labour party idea to raise billions to help with energy bills this winter.
Tory Ministers have opposed the demand from Labour’s Keir Starmer but with a chorus of voices, from poverty campaigners to energy company executives, calling for action the Treasury is considering the plan.
Even BP chief Bernard Looney said his firm’s investment plans in the North Sea would not be affected by a windfall tax.
Last November Looney described his company’s profits as a “cash machine” on the back of rising energy costs.
After a disastrous Queens Speech of policy measures that promised nothing specific to tackle rising prices, Ministers gathering for a Cabinet away day on Thursday are under pressure to find solutions.
Sunak has now put the plan “back on the table” according to Treasury sources although other Ministers remain opposed to the move.
Sunak could try to use a windfall tax and an emergency budget to restore his own tattered reputation.
He fell from grace after it was revealed that his wife was registered as a non-dom for UK tax purposes and that he himself retained a US green card for tax for a year after becoming chancellor.
Labour has been demanding a windfall tax on North Sea oil and gas operators for months and estimate that it could now raise more than £2 billion to cushion the pain of rising energy bills.
Oil and gas company profits have leapt on the rise in wholesale prices.
In March the independent Office for Budget Responsibility increased its forecasts for UK oil and gas tax receipts by £5.2 billion to £13 billion in the year to April 2023.
That is far higher than before the pandemic and is the highest return from the North Sea since 2011, when £9.6 billion was collected.
Downing Street later said that neither Boris Johnson nor Chancellor Rishi Sunak believe a windfall tax was the “right approach”, but that it was important to keep all options on the table.
“We do keep options on the table – rightly so,” the Prime Minister’s official spokesman said.
“But, as the Prime Minister has set out, as the Chancellor has said, we do not think this is the right approach.
“We want these companies that are making profits to make further investments. But we are simply not cutting off options given the circumstances that we find..”
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