A proposal to impose a one-off ‘windfall tax’ on oil and gas companies operating in the North Sea has been met with mixed reactions in UK Parliament, with the Conservative government appearing to reject the proposal despite increased calls for its implementation over the weekend.
The tax is intended to help lessen the price of consumers’ energy bills, requiring fossil fuel companies to contribute £1.2bn to Labour’s overall £6.6bn proposed investment, hoped to push household bills down by £200.
The plan was laid out by shadow chancellor Rachel Reeves over the weekend, who said in a statement: “There is a global gas price crisis, but 10 years of the Conservatives’ failed energy policy, and dither and delay, has created a price crisis that’s being felt by everyone.”
Similarly, in a tweet, Labour leader Kier Starmer wrote:
“The Tories have been asleep at the wheel, with hard-working people paying the price.
Labour would act decisively to give families security by bringing down energy bills and tackling the Conservatives’ cost of living crisis.”
However, Conservative MP
’s have already voiced their opposition to the tax as they say it will contribute to what is already a difficult time for the oil and gas industries. Education Secretary Nadhim Zahawi (also a former oil industry executive) told LBC Radio: “What Labour are putting out just doesn’t add up. A windfall tax on oil and gas companies that are already struggling in the North Sea is never going to cut it.”
The debate comes as the UK Government sees increased pressure to address rising energy prices, with some estimates suggesting we may see a spike in domestic bills by as much as 50% by April – representing an average bill increase of £700 per year.
Dipping into oil and gas revenues to ease these costs is also being increasingly posed as a solution to the problem and Liberal Democrat leader Sir Ed Davey said that the measure would “provide vital cash to support vulnerable families facing crippling energy price hikes”.
A decision from Ofgem is due in February over the potential rise in consumers’ energy bills.