Tag: Windfall Tax

Scottish Ministers step up attacks on energy Windfall Tax

The debate over the UK’s windfall tax on oil and gas companies has reignited after Scotland’s First Minister called for the levy to be scrapped. He joins his Scottish Government colleagues in putting pressure on UK ministers after lobbying from the energy industry.

Citing uncertainty caused by conflict in the Middle East, John Swinney said the Energy Profits Levy is harming investment and jobs. But with global gas prices rising again (57% increase month on month as per market data at 1400 on 4 March) and energy companies continuing to post strong profits, campaigners argue weakening the tax would not help households already struggling with high bills.

A spokesperson for the End Fuel Poverty Coalition, commented:
“Conflict in the Middle East and rising global gas prices show exactly why the Windfall Tax remains necessary, not why it should be scrapped. When geopolitical tensions push up prices, energy companies and their shareholders benefit while households face another round of higher bills from 1 July.

“Energy firms have made tens of billions in UK profits in recent years even with the Energy Profits Levy in place, so the idea that removing it will suddenly make energy cheaper or more secure simply doesn’t stand up. The North Sea is declining because of the geology of an ageing basin, not because companies are paying a fair share of tax.

“Instead of handing the industry a tax break, governments should be using these revenues to cut bills, tackle energy debt, support workers through the transition and invest in warm homes and clean energy so households are protected from exactly this kind of global price shock.”

Windfall Tax in the firing line as Blair Think Tank backs energy industry

The Tony Blair Institute has repeated its call for an expansion of gas production in the North Sea and an end to the energy firm Windfall Tax.

The think tank has links to the Saudi government, the United Arab Emirates, Elon Musk’s Starlink [pdf, p8] and Trump apply Larry Ellison.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The Tony Blair Institute’s so-called ‘reset’ looks less like a fresh start and more like a defence of fossil fuels and an energy industry that has made over £125bn in UK profits since 2020.

“For the Institute to call for the Windfall Tax to be scrapped, while energy giants post extraordinary profits and millions live in cold, damp homes, is staggering. That tax exists because companies benefited from a crisis that devastated household finances.

“Removing the Windfall Tax would reward profiteering and shift the burden back onto households that are still paying the price of Britain’s over-reliance on gas.

“It was exposure to volatile global fossil fuel marketsthat sent bills through the roof, not climate targets and doubling down on new North Sea exploration will not lower bills.

“Gas is sold at international prices and the North Sea is a declining geological resource that cannot meet the country’s heating needs in the long term. The answer to high bills lies in accelerating homegrown renewables, reforming electricity pricing and investing in energy efficiency, not returning to the solutions of the past.”

Jess Ralston from the Energy and Climate Information Unit said:

“With many households still facing debts from the gas crisis of the past few years, focussing on bringing down bills is particularly key for them. Electrification, through the adoption of net zero technologies like heat pumps and EVs, will gradually reduce our vulnerability to the volatility of international oil and gas prices.

While the thrust of this report is around cheaper power, it’s not clear how many of its recommendations will lower bills. More drilling in the North Sea won’t make any real difference to the gas bills British homes pay because it’s international markets driven by Putin and Trump that dictate the price. The regulator’s own analysis shows more drilling will make very little difference to how steeply North Sea output continues to decline.

“Renewable wind power lowered the wholesale power price by around a third in 2025, squeezing more expensive gas power off the system. Every wind turbine we build or solar panel we install means the UK is less dependent on gas imports and less vulnerable to volatility in the gas price. We don’t have to import wind or sunshine.”

Meanwhile a spokesperson from the Green Alliance think tank added:

“We don’t need to rethink a clean power plan that’s working – the UK generated record-breaking amounts of renewable energy last year, and wind power replacing gas cut the wholesale cost of electricity by a third. Tony Blair’s think tank rightly points out that we need to make sure businesses and families save as a result, but gives few suggestions for how to do this. Given the former politician’s extensive ties to petrostates and oil and gas firms, it’s a bad look to see his institute call for more drilling in the North Sea, which will do nothing for our energy security.”

Energy Profits Levy retained as households still face high bills

The Chancellor’s decision to keep the Energy Profits Levy has been met with fierce opposition from parts of the energy industry, despite falling revenues from the tax.

A spokesperson for the End Fuel Poverty Coalition commented:

“The Chancellor was right to maintain the Energy Profits Levy and then reform it after the current period ends. Given tax rises elsewhere in the budget, it would have been perverse to have then handed a tax break to companies that are making extraordinary profits during the crisis.

“Given that the North Sea will naturally run out of gas, more drilling won’t make energy cheaper or the country more energy secure. But as the gas industry declines, it is vital that workers and communities affected by the changing energy mix are properly supported.

“Even with the changes announced in the Budget, we still expect that from April 2026, average energy bills will be hundreds of pounds higher than they were in winter 2020/2021.

“And in Scotland, we will see a real terms reduction in the funding available for vital energy efficiency measures with the scrapping of the ECO levy, which we would urge the Chancellor to address with the receipts from the Windfall Tax.

“The millions of households who will still be struggling with the cost of energy need further bold action from Governments in Westminster and Holyrood in reform of energy pricing, targeting energy bill support at those who need it, and in creating an ambitious Warm Homes Plan to upgrade cold, damp homes.”

Chancellor mulls £6bn tax cut for gas firms while slashing warm homes budget

Changes to the windfall tax being considered by Rachel Reeves in this month’s budget could see the oil and gas industry handed a £6 billion tax cut, whilst promised investment in energy efficiency to cut household bills is potentially going to be slashed by the same amount (£6.4bn). 

With tax increases for working people also widely expected, any roll-back on funding for warm homes would represent yet another broken manifesto promise from this Chancellor, say campaigners. 

According to media briefings reported by The Guardian, the Treasury is considering diverting funding from the £13.2 billion Warm Homes Plan — a programme designed to improve cold, damp homes and permanently lower household energy bills — in order to fund short-term energy bill support.

The proposed move would effectively cut the UK’s energy efficiency budget by 40% over five years by substituting parts of the Warm Homes Plan for existing schemes.

Meanwhile, proposals drafted by the oil and gas lobby group Offshore Energies UK, which are being considered by the Chancellor, suggest that removing the Energy Profits Levy at the end of this year, as the industry is pushing for, would lead to a tax loss of £6 billion to the UK Treasury over the next decade.(1) 

The oil and gas industry has been lobbying hard for months to scrap the windfall tax in order to reduce their tax bill, despite the sector posting billions in profit, and companies like Shell reporting negative UK taxes last year.

In response to the proposed tax cut, Robert Palmer, deputy director of Uplift said:

“Oil and gas companies have made billions in recent years while millions of people in the UK have struggled with unaffordable energy bills. Worse, firms have chosen to hand these windfalls to overseas shareholders rather than reinvesting them to support UK jobs. To even be considering scrapping measures to cut household bills while cutting taxes for profiteering oil companies would be deeply unfair.” 

Palmer also called out the poor economics of the basin and warned Reeves against propping up an industry that is only profitable because of the UK’s generous tax regime.

“The reality is the North Sea is in rapid decline, with most of the gas already burned – and what’s left is increasingly expensive to extract. New drilling is only viable if we hand out even bigger tax breaks to wealthy energy companies, taking money away from public services. Quite apart from the climate impact, it is economic lunacy to continue to allow drilling that would not be viable without the Treasury’s thumb on the scale.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented:

“Giving tax breaks to fossil fuel giants and failing to collect tax from large corporations while cutting support for those in fuel poverty are short-term acts of weakness by the Chancellor.

“We obviously understand the urgent need to cut energy bills, but the Chancellor – who previously brought us the Winter Fuel Payment fiasco – is not thinking things through. Taking action to improve energy efficiency helps to cut  bills in the long run, protect health and reduce our dependence on expensive fossil fuels. 

“It’s entirely possible to bring down energy bills in a fair way — by improving insulation, reforming electricity pricing, and using public investment to upgrade our grid. Instead, we’re seeing the Government ignore long-term solutions while considering tax cuts to those who need them least.”

The latest data shows that around 12.1 million UK households are struggling with unaffordable energy bills, with 5 million of those in deep fuel poverty — spending over 20% of their income on energy.

Annabel Rice, senior political adviser at Green Alliance, said: 

“If the government is serious about lowering people’s bills for good, they must invest in insulating our homes, not raid schemes that have helped families lower their energy costs to make their sums add up in the budget. 

“We’ve seen more than five different insulation schemes from the government in recent years in England and they show us one thing: stop-start policies confuse homeowners, make jobs in this industry less viable and create uncertainty for investors. With almost nine million families in fuel poverty as winter approaches, it’s time for a fully funded, long term Warm Homes Plan.”

The Warm Homes Plan had been expected to support a wide range of upgrades including insulation, heat pumps, home energy advice, and local council-led retrofit schemes. It was announced as a cornerstone of the UK’s mission to reduce energy demand, support vulnerable households, and cut carbon emissions.

But experts warn that diverting its funds to cover existing schemes will drastically limit its impact, especially for households living in the worst conditions — and risks undermining the Government’s own statutory targets to end fuel poverty by 2030.

Jonathan Bean, campaigner at Fuel Poverty Action, said:

“The Government should be focussed on getting homes fixed, and replacing the failed Eco4 scheme with a well funded home upgrade program that delivers high quality work and guaranteed bill savings.  We need a bigger investment in retrofit skills and quality control, not a budget cut that ends up in the pockets of the oil and gas giants.”

Plans to axe energy Windfall Tax branded premature

The Government has set out plans to wind down the Windfall Tax on energy firms in response to demands from the industry.

Analysts from Uplift told Sky News that the introduction of this price floor will further undermine an already weak windfall tax and paving the way for further oil and gas extraction.

The Energy Profits Levy already contained a loophole which could have helped tackle fuel poverty last winter, as well as acting as a handout to the fossil fuel industry with the UK government expected to give highly profitable oil & gas companies £11.4 billion in tax breaks to develop new fields.

A spokesperson for the End Fuel Poverty Coalition, commented:

“Energy bills are predicted to remain high and levels of household energy debt are still surging.

“Any talk of reducing or ending the windfall tax while millions still struggle through the energy bills crisis is premature.

“The Government should keep all options on the table to ensure the funding is available to fix Britain’s broken energy system into the long term.”

The decision has been described as shortsighted in light of the lack of long-term certainty about energy bills and Greenpeace UK’s climate campaigner, Georgia Whitaker, said:

“The Government’s windfall tax on oil and gas companies already contains more loopholes than a block of Swiss cheese. And now they want to scrap it altogether.”

Closing tax loopholes could raise £22bn to tackle energy bills crisis

Removing the tax incentive loophole in the government’s energy profits levy would have generated at least £22bn in additional revenue.

The investment incentive loophole allows oil and gas firms to claw back more than 91% of their capital investment in the form of tax relief.

This then incentivises further investment in exploring and extracting more oil and gas that will worsen climate change and do little to address the energy crisis. The loophole has already been exploited by companies including Shell, which paid no windfall tax this year despite the tax operating since May.

As reported exclusively in the Independent, closing this loophole alone could pay for emergency insulation measures for 3.31 million households and cut energy costs by £336 per year per household next year.

Produced by the New Economics Foundation for the Warm this Winter coalition, which includes End Fuel Poverty Coalition, Possible, Uplift and Green Alliance, the report analysed the savings from a programme of tax and spend that the Chancellor could have chosen instead, focusing on energy efficiency and insulation.

Previously the End Fuel Poverty Coalition has indicated that the cost of keeping everyone warm this winter would be in the region of £14 billion.

The research also outlines how, if the government got on with the job of more than tripling installed capacity of onshore wind, offshore wind and solar by 2030, then there would be £28.5 billion of savings to the UK’s energy system by 2025. If the government unblocks onshore wind and avoids restricting new solar energy projects, this would save an additional of £3.1 billion by 2025 compared to the current scenario.

Polling conducted by Survation to coincide with the research found that 85% of people in the UK support a windfall tax to invest in insulation and lower energy bills.

Amongst those who voted Conservative in 2019, 85% supported these measures, and among those who intend to vote Conservative in the next election 87% of people supported this.  81% want to see the government speed up the development of onshore wind and solar energy to less reliance on gas.

The findings are being released on Fuel Poverty Awareness Day and as the government considers an amendment to the Levelling-up and Regeneration Bill that would remove the ban on onshore wind in England, and as the government is consulting on a £1bn programme on energy efficiency.

A spokesperson for the End Fuel Poverty Coalition, commented:

Millions of people are now condemned to facing the misery of living in cold damp homes this winter, but these calculations show that these are political choices.

The Government has plenty of room to help out.

Not only could the solutions proposed by the Warm This Winter campaign save households money and alleviate some of the worst effects of fuel poverty this winter, but they would be cost neutral to the Government.

Sadly the Government chose a different path and now will have to brace itself for a fuel poverty-led surge on the NHS this winter.

Alethea Warrington, campaigns manager at climate charity Possible, said:

Getting off gas for good with renewable energy would cut energy bills and emissions, helping us to build a safer future for all.

Oil and gas producers are raking in record profits, even as people’s homes get colder and our climate gets hotter.

Despite this, the government is still resisting unblocking onshore wind, even though it’s a vital source of clean, cheap energy which is highly popular across the UK.

We need urgent action to get on with the job of delivering clean energy and insulation so we can end reliance on polluting, expensive gas.

Tessa Khan, director of Uplift, said:

For a small fraction of the money this government is prepared to spend subsidising gas fields and on expensive gas imports, it could be investing in sensible solutions that will end up saving the Treasury money and lead to permanently lower bills for households.

Practical, proven measures, like home insulation and affordable onshore renewables are what this country needs, not more wasteful deals with profiteering gas giants that are pushing millions into fuel poverty. The first priority of this government must be to the people in the UK, not their profits.

Emmet Kiberd, economist at NEF, said:

Warm this Winter’s proposals would boost growth, create jobs and help us meet our national net zero commitments and could be fully funded by making oil and gas firms pay their fair share in windfall taxes.

Removing the investment incentive for oil and gas firms would easily fund a £3.6bn programme of energy efficiency improvements over the next two years, while still leaving the oil and gas sector with profits after tax around the normal level.