Key events
Jeremy Hunt offers ‘get-out’ clause from windfall tax
Meanwhile, the chancellor, Jeremy Hunt, has offered the North Sea oil and gas industry a “get-out” clause from the windfall tax on fossil fuel profits if wholesale energy market prices fall back to normal levels.
Jillian Ambrose reports:
The chancellor hopes to boost investment in the North Sea by agreeing to suspend the windfall tax on oil profits if the market price for Brent crude falls below $71.40 a barrel, and gas prices fall below 54p a therm, for a period of six months. The global oil price is now about $75 a barrel, and the UK’s gas price is about 64 p/th.
The Treasury has put forward the change a little over six months after raising the energy profits levy from 25% to 35%, on top of the usual 40% rate of tax, and extending the regime by two years until 2028. It is expected to raise tens of billions of pounds to help cover the cost of the government’s support for energy bills.
The government said its levy had raised about £2.8bn to date, and it did not expect the new changes to have an impact on the tax receipts based on current forecasts for energy market prices.
The levy attracted fierce criticism from the North Sea industry, which claimed it could put the brakes on new investment in oil and gas projects at a time when the government hopes to increase domestic fossil fuel production.
Today’s admission from the shadow chancellor (see 9.24am) comes less than two years after Rachel Reeves pledged £28bn a year in climate measures until 2030 to protect Britain from disaster and told Labour’s party conference that she would be “the first green chancellor”.
Labour said in September 2021 that the amount would quadruple the government’s current capital investment. In total the party said it would commit £224bn on climate measures over the next eight years.
Targets for spending were planned to include gigafactories to build batteries for electric vehicles, the hydrogen industry, offshore wind turbines made in Britain, cycle paths and flood defences, Jessica Elgot reported at the time.
Here’s full story from Whitehall editor Rowena Mason:
Labour says £28bn green prosperity plan in doubt
Labour has admitted that its £28 billion green prosperity plan may have to be watered down.
Blaming the Tories, who she said had “crashed our economy”, Rachel Reeves, the shadow chancellor, this morning said she could not supply a “final set of numbers” on spending until a further fiscal statement from the government.
She told BBC Radio 4’s Today programme:
The other thing that has happened in last two years is the Tories have crashed our economy, and as a result interest rates have gone up 12 times, inflation is now at 8.7% and I’ve always said our fiscal rules are non-negotiable.
Economic stability, financial stability, always has to come first and it will do with Labour. That’s why it’s important to ramp up and phase up our plans to get to the investment we need to secure these jobs so that it is also consistent with those fiscal rules to get debt down as a share of GDP and to balance day-to-day spending.
The £28bn figure, previously given by Labour, would instead be a target to work towards, she said, rather than the initial sum allocated for the plan in the first year of government, as the party had previously pledged.
She also said she is “staggered” that the prime minister gas returned from the US with “no industrial plan” for Britain after Rishi Sunak and the US president Joe Biden’s announcement of the Atlantic Declaration:
I’m staggered frankly that he’s come back with no industrial plan for Britain to seize the opportunities that they are seizing in the US.
I’ll be looking after the politics blog today. Please get in touch with any tips or suggestions: miranda.bryant@guardian.co.uk
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