Windfall tax not enough

As chancellor Rishi Sunak on Thursday (May 26) announced U-turn on a windfall tax on oil and gas companies’ profits to help pay for emergency relief to tackle the cost of living crisis, Unite has said the measures do not go far enough.

Amid the furore of prime minister Boris Johnson’s ongoing ‘partygate’ scandal, it is understood that Sunak brought forward his statement on the cost of living crisis by several weeks.

Among the measures included in the statement was a 25 per cent windfall tax on oil and gas companies’ profits – a policy that the Labour party and many others have long called for – that will raise £5bn in the first year. Money raised from this levy will in part fund a £15bn package of both targeted and universal support for energy bills.

The windfall tax will apply until oil and gas prices return to normal levels, with the levy due to expire in December 2025 if it is not revoked before then.

Fending off criticism earlier this year that the government was not doing enough for households who are struggling the most, Sunak announced that all families on means-tested benefits such as Universal Credit and legacy benefits will receive a one-off £650 payment in October.

Those claiming disability benefit, many of whom will also be eligible for the £650 payment, will receive an additional £150 payment, while pensioners will receive a £300 payment as part of their winter fuel allowance which is typically paid in November or December.

All households will receive an extra £200 rebate on their energy bills from October, in addition to a previously announced £200 rebate, which was previously a loan that had to be paid back over five years. Now both payments together — £400 in total – will constitute a grant that will not have to be paid back.

While many welcomed the chancellor’s package of support, critics highlighted that the government waited far too long at a time when inflation has been skyrocketing for months. Others have pointed out that families with children will not get any additional support, and that the support announced comprises only one-off payments when the worst of cost of living crisis in generations could continue for some time yet.  

Commenting, TUC general secretary Frances O’Grady said, “The chancellor should have acted far sooner after his inadequate spring statement. His dither and delay has caused unnecessary hardship and worry for millions. While today’s intervention is badly needed, we should have never been here in the first place.

“With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate – not just a one-off boost,” she added. “That’s the best way to protect livelihoods and to support the economy.”

Meanwhile, Unite general secretary Sharon Graham asserted that the windfall tax – which will only be levied on oil and gas companies’ UK profits and will be accompanied by an investment allowance enabling firms to reduce their liabilities – has not gone far enough.

 “This headline grab does little more than scratch the surface of the cost-of-living crisis,” she said. “As people struggle to make ends meet, huge-scale profiteering continues. This is not about one sector – firms right across the economy are still cashing in on the crisis, making more money now than they were before the pandemic.

“We need a windfall tax on all those who have profited while people have suffered, not just energy firms,” Graham added. “It’s very simple. Those guilty of looting and profiteering during the crisis should now pay for it.”

By Hajera Blagg