Autumn Statement: Another windfall tax raid would further damage Britain’s reputation

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A further windfall tax on North Sea oil and gas could come in the Autumn Statement
A further windfall tax on North Sea oil and gas could come in the Autumn Statement

We are now less than 48 hours from the Autumn Statement, and knowing quite what medicine Jeremy Hunt feels it necessary for Brits to choke down to fix the so-called ‘black hole’ in the finances.

One hopes the rumours of higher council tax, a reversed bank surcharge reduction and a variety of other pocket-pinching measures remain just that. Above all, it seems particularly perverse to see the Chancellor seemingly pitch-rolling for an extension of an arbitrary windfall tax on energy companies. 

On a point of principle, sensible economies and governments do not arbitrarily whack higher taxes on companies because they happen to be doing well. We have already failed that test, thanks to the now-Prime Minister Rishi Sunak’s decision to do just that earlier this year, abandoning the most basic of logic because of some negative press in the Daily Mirror. 

That should be particularly the case when the relevant sector – in this case, oil and gas – is a vital part of our foreign policy, ensuring our energy independence. 

Hunt expected to move on tax hikes in Autumn Statement

We have now heard from a variety of bodies – both the ‘dirty’ energy industry and shiny ‘green’ one – that an extension to the windfall tax would essentially put a halt on all new UK energy projects. 

It would also serve as a reminder to the global investment community that coming to Britain no longer comes with it a guarantee of a stable, predictable tax regime. 

Two fallacies underpin the tax hikes coming up this week: one, that tax hikes and spending cuts are the only way to improve the public finances, and two, that pedestrian economic growth can be tolerated as long as the bond markets don’t flap. 

Hunt and Sunak are in danger of throwing the baby out with the bathwater: strangling economic growth (such as it is) in the middle of a recession, whilst also making the UK appear deeply uninvestable – even more so than Westminster’s chaotic past year has already managed.