UK PM Candidates Urged to Scrap Windfall Tax on Energy Profits as Soon as Possible

Undated file photo showing jack-up rigs used by North Sea drillers. (Steve Parsons/PA Media)

A British energy industry body has urged the candidates in the running to become prime minister to scrap the windfall tax on profits as soon as possible.

The temporary 25 percent profit levy on oil and gas giants was announced in May by then-chancellor Rishi Sunak to fund a relief package for households struggling with rising bills.

Offshore Energies UK (OEUK), which represents the offshore oil and gas industry, said the sector will pay about £13.8 billion ($16.7 billion) into the Treasury next year as a result of the windfall tax and corporation taxes.

Liz Truss during a hustings event in Darlington, County Durham, as part of the campaign to be leader of the Conservative Party and the next prime minister, on Aug. 9, 2022. (Danny Lawson/PA)

In open letters to Sunak and Foreign Secretary Liz Truss, who are competing against each other in the race to become Conservative Party leader and UK prime minister, the industry body urged both candidates to scrap it as soon as possible and not to extend it beyond the 2025 sunset clause.

In the letters, OEUK chief executive officer Deirdre Michie wrote that her organisation remains “concerned at the negative impact on investor confidence” and wants to “work with the new cabinet to ensure that this is mitigated where possible.”

Truss: Profit Not a ‘Dirty Word’

The two contenders are trying to strike a delicate balance between heeding the calls from the industry and addressing rising living costs, as the latest predictions suggest energy bills could top £5,000 ($6,065) by the spring.

Truss, the front-runner in the leadership race to succeed Prime Minister Boris Johnson, has made clear she opposes any new windfall tax.

At a hustings in Cheltenham on Aug. 11, Truss said she would “absolutely” not support a windfall tax, claiming it is a “Labour idea.”

“It’s all about bashing business, and it sends the wrong message to international investors and to the public,” she said.

She insisted that profit is not a “dirty word” and argued that it being treated as such is “a massive problem.”

Rishi Sunak at the hustings event in Darlington (Danny Lawson/PA)

‘Black Hole’

But Sunak defended the windfall tax he had implemented as chancellor, claiming it would “automatically raise more money” in tax to support struggling households as energy profits increase.

In an interview with Times Radio, the former chancellor said taxing the rising profits of the energy giants was “the right thing to do.”

He also claimed his opponent’s plans to cut taxes would do “virtually nothing” for pensioners or the least well-off.

A Sunak campaign spokesman added that Truss had “blown a further £5 billion black hole in her plans” by not backing the windfall tax.

PA Media contributed to this report.