Downing Street has ruled out imposing a windfall tax on energy firms’ bumper profits to tackle the cost of living crisis.
The prime minister’s spokesman dismissed fresh calls for a one-off levy after BP announced it had made a £9.5bn profit in 2021.
He said it would “deter investment in the North Sea” and ultimately cost the Treasury money.
Labour and the Lib Dems, as well as some Conservative MPs, back a windfall tax to fund measures to help people cope with rising bills.
Energy firms are currently enjoying huge profits thanks to high wholesale gas prices.
Responding to BP’s announcement, shadow climate and net zero secretary Ed Miliband said: “The boss of BP described the energy price crisis as a cash machine for his company - and the people supplying the cash are the British people through rocketing energy bills.
“In these circumstances, it is only fair and right for oil and gas producers to contribute to helping the millions of families facing soaring inflation and a cost of living crisis.
“The Chancellor is completely out of step with the mood of the country in rejecting a windfall tax. His buy now pay later scheme for the energy spike will just push the costs onto future bills, and the government has no plan to create a more secure and sustainable energy sector for the future.
“It tells you everything you need to know about where this Government stands that they won’t take the action necessary to help people through this crisis.”
Lib Dem leader Ed Davey said: “A windfall tax is the best way to get money to the people who need it quickly, but also to make sure there is some sense of trust and proportionality in the system.”
At a briefing for journalists this morning, the PM’s spokesman said: “The impact of a windfall tax would be to deter investment in the North Sea.
“Recently, these companies have paid significantly more in tax and will continue to bring billions of pounds into the economy.”
Sunak last week unveiled a £9bn package to cut council tax and energy bills, but stopped short of imposing a windfall tax.
Under the Chancellor’s plan, energy firms will receive state-backed loans underwritten by taxpayers allowing them to cut bills by £200.
Under the “rebate and clawback” scheme, the companies will recoup the money from their customers by adding £40 a year to bills for the next five years.
Meanwhile, properties in council tax bands A to D will receive a £150 rebate on their bills from April.
The Chancellor said the move would benefit around 80 per cent of homes in England.