Energy companies could face a profit tax if they do not reinvest their large profits, the government minister said, acknowledging “extreme pressure on family finances”.
Simon Clark, the Treasury’s chief secretary, told Kay Burley of Sky News that the introduction of such a fee could not be ruled out and that “all options are available.”
This seemed to be the strongest hint from the government that a tax on unexpected income, first proposed by Labor and which would be used to offset growing energy bills, could be passed.
However, it is clear that the Prime Minister and other members of the Cabinet are not yet convinced.
Mr Clark told Sky News’s Kay Burley that the government recognizes “a real problem for households up and down the country”, which is likely to worsen again in the autumn when energy prices rise again.
He added: “As for the very concept of a tax on windfall income, we are very clear that at a time when the industry is making very significant profits, there is a real need to reinvest these profits in new offshore facilities – to get more from The North Sea, which is obviously vital in terms of energy supplies, but also good for jobs and the economy as a whole.
“If we don’t see the investment materializing, then we’re very clear that all the options are on the table.”
The comments come after Jesse Norman, a former finance minister, became the last Tory MP to adopt the idea of a tax on unexpected income given “emergency times” and argued that Mrs Thatcher “in her pragmatic heyday” would support her.
George Osborne, a former chancellor, said on Sunday at the Andrew Nile show on Channel 4 that he thought Rishi Sunak would eventually do so.
Mr. Clark’s remarks that the option will not be canceled are repeated previously made by Mr. Sunak and other ministers.
This comes at a time when energy companies are making big profits from rising oil and gas prices, even as the surge shrinks household finances – and is largely responsible for raising inflation to its highest level in four decades.
Mr Clark told Sky News that Mr Norman had made a “very important point” about the idea of an income tax.
“We certainly don’t rule that out,” he said.
“I am never instinctively drawn to tax increases because it risks holding back investment in new capacity and new jobs – but it is an emergency, we recognize that there is tremendous pressure on family finances and the industry needs to hear the message loud and clear.
“If investments do not come in, we cannot rule out that a tax on unexpected income will have to be introduced.
“At the moment we are not making any statements, but we do not rule this out.”
If companies don’t make the necessary investments in the North Sea, it will mean they are “actually just saving profits and doing nothing to justify them,” Clark said.
“These are actually one-time and extraordinary achievements for the industry,” he added.
Labor leader Sir Keir Starmer last week accused the prime minister of trouble on the introduction of a tax on windfall income – a policy he suggested the government would eventually have to adopt.
Split appeared between Boris Johnson and Mr. Sunak over the proposal.
Sky News understands that Mr. Sunak found it useless that Tory MPs were ordered to vote in the House of Commons against this policy.
Abena Oppong-Assare, the shadow secretary of the Labor treasury, called for more urgent action.
She told Sky News that her constituents could not afford to take a bus to go to a food bank or employment center.
“I was disappointed to hear from Simon Clark what they expected from the gas companies in terms of demonstrating leadership in this … it’s just an unreasonable thing in terms of the government having to continue this,” she said.