There will be no oil and gas producers meeting with the Chancellor tomorrow, trade body OEUK has confirmed, despite reports to the contrary.
It was reported earlier, first by The Sun, that energy firms will meet Nadhim Zahawi tomorrow on a second “full fat” windfall tax which would “close loopholes” in the energy profits levy introduced earlier this year, citing a Treasury source.
However trade body Offshore Energies UK (OEUK) has confirmed that the meeting will only involve utility companies, which includes producers of renewable energy.
No oil and gas firms will be in attendance, it confirmed.
Oil and gas companies operating in the North Sea are already liable for two separate profit-related taxes.
These include ring fenced corporation tax (currently set at 30% of profits) supplementary charge (Currently set at 10% of profits)
When the energy profits levy’s additional 25% tax is taken into account, this amounts to oil and gas companies in the UK north sea currently being taxed 65% on profits.
HM Treasury estimates that windfall tax will raise an extra £5 billion in its first year, in addition to the £7.8 billion tax ‘take’ already predicted for 2022-23.
An industry insider briefed that although extra taxation could be argued for oil and gas companies in light of record second-quarter profits, other areas of the energy sector are also making “major profits”, namely renewables.
Today it was reported that the UK is planning for several days over the winter when cold weather may combine with gas shortages, leading to organised blackouts for industry and even households.
Under the government’s latest “reasonable worst-case scenario,” Britain could face an electricity capacity shortfall totaling about a sixth of peak demand, even after emergency coal plants have been fired up, according to people familiar with the government’s planning.
Rising cost of living
Energy bills are set to reach £4,200 by January according to the latest forecast.
Octopus Energy issued a warning to British households, encouraging people to keep an extra £500 to make it through the cold months.
Greg Jackson, chief executive of the British energy company, has a £16 billion pound plan to hand out £400 to households across the country. However, the latest reports show this will not be enough.
The Octopus boss called for assistance from the government to help the British public through the winter.
In a statement to the BBC, Mr Jackson said: “If the £16bn package was right previously, then clearly it’s not sufficient now and we need to look at similarly significant assistance from the Government for this winter.”
Non-executive chairman of Utilita, Derek Likorish argued we need a “dramatic” increase in support of between £800 and £1,000 was needed, calling for a social tariff to help the poorest in society.
Previous talks on Windfall tax
A senior figure at HM Treasury confirmed recently that decommissioning rebates will be exempt from the windfall tax.
However, UK firms can only claim a rebate once their fields stop production, meaning they can carry back big decommissioning losses against premium taxes paid during production.
In June Rishi Sunak met with oil and gas bosses in Aberdeen and announced that companies would not be able to offset previous losses or decommissioning costs against profits subject to the levy.
In an effort to incentivise companies to invest in new oil and gas developments, the windfall tax also included a near doubling of the investment allowance.
It means firms will get 91 pence back for every £1 they spend, for a total relief rate of 91.25%.