Business Secretary Grant Shapps hints at autumn budget windfall tax expansion on energy firms due to ‘unexpected profits’
Business Secretary Grant Shapps has hinted that the government may extend the windfall tax on oil and gas companies in this month’s autumn budget as it tries to stabilise the UK’s public finances.
Speaking to Sky News with just 10 days to go before the government’s fiscal plans are unveiled, Mr Shapps said: “I mean, it is the case that because fuel prices have been so high, there have been unexpected profits, of course.
“But I think it’s important that we do carry on investing in making sure not on fossil fuels, but on the renewable energy as well, that we’ve we’ve got the capacity, we’ve got the ability to get that market moving as well.”
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He added that the general public will “have to wait until the 17th” to know exactly which measures the government is going to pursue to tackle what the Resolution Foundation thinktank has said is a £40bn financial black hole.
Last week, an initial report in The Times suggested that Prime Minister Rishi Sunak and Chancellor Jeremy Hunt were planning to extend windfall taxes on oil and gas companies to raise an estimated £40bn over five years.
Mr Sunak and Mr Hunt want to maximise revenues from the windfall tax by increasing the rate from 25% to 30%, extending the policy until 2028, and expanding it to cover electricity generators – according to the paper.
With BP unveiling profits that doubled to more than £7.1bn in the three months to September, pressure is continuing to mount for an enhanced windfall tax on oil and gas giants to help fill the Treasury coffers.
COP26 president Alok Sharma, who was demoted from the cabinet by Mr Sunak, has backed the move, saying: “We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”
The Resolution Foundation said in a report last week that tax raises are “likely” to come soon as the government faces an “unpalatable menu” to find ways to re-balance the nation’s finances after former chancellor Kwasi Kwarteng’s ill-fated economic plans.
A combination of tax rises and spending cuts is likely to find the £40bn needed, it said.
Mr Sunak and Mr Hunt are currently figuring out how to tackle the abysmal economic forecast ahead of the autumn statement on 17 November, which was pushed back soon after Mr Sunak reappointed Mr Hunt.
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The Resolution Foundation’s report added that a recession next year could be predicted by the government’s independent forecaster, the Office for Budget Responsibility.
Last week, the Bank of England raised its official interest rates by 0.75 percentage points to 3% and said the UK was already in recession.
It was the single biggest increase in more than three decades.
While GDP forecasts could be cut by up to 4% by the end of 2024.
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The autumn statement this month will likely encompass “rough” tax rises, Sky News has been told by a source in the Treasury.
The tax rises are likely to be across the board, although Mr Sunak and Mr Hunt are said to have agreed those with the “broadest shoulders” should bear the greatest burden, it is understood.
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Few concrete details have emerged but, according to The Times, public sector workers could face deep real-terms cuts to wages, with the Treasury reportedly looking at an increase of 2% across the board for 2023-24, at a time when inflation is expected to be well above that threshold.
The Resolution Foundation has said £9bn could be saved by the government choosing not to raise benefits and pensions in line with rising prices next year, but any such move would have a “huge” impact on those already struggling to make ends meet.
Another option would be to re-instate the health and social care levy to raise £15bn by 2026-2027, while around £2bn could be raised by extending the “stealth” freezes in income tax threshold by a further year to 2026-2027.
A new aid system has opened its first distribution centres in Gaza, according to a US-backed organisation dealing with supplies.
The Gaza Humanitarian Foundation (GHF) began its operations in the territory on Monday, following the resignation of its director, Jake Wood, over its independence.
Gaza’s 2.3m population has been pushed towards famine by Israel’s almost three-month blockade.
Boxes of aid to be distributed across Rafah. Pic: Reuters.
The GHF said lorryloads of food – it did not say how many – had been delivered to its hubs, and distribution to Palestinians had begun.
“More trucks with aid will be delivered tomorrow, with the flow of aid increasing each day,” it said in a statement.
The controversial group, backed by Israel and the United States, has been rejected by the United Nations and other aid groups.
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People line up for food in Gaza
UN agencies and major aid groups have refused to cooperate with the GHF.
They claim Israel is weaponising food, and the new distribution system will be ineffective and lead to further displacement of Palestinians.
They also argue the GHF will fail to meet local needs, and violates humanitarian principles that prohibit a warring party from controlling humanitarian assistance.
In the meantime, scores of Palestinians in Gaza, like Islam Abu Taima, have resorted to searching through rubbish to find food.
Palestinians are having to search through rubbish to find food
She found a small pile of cooked rice, scraps of bread, and a box with a few pieces of cheese inside it – which she said she will serve to her five children.
“We’re dying of hunger,” she told the Associated Press news agency.
“If we don’t eat, we’ll die.”
Islam Abu Taeima finds a piece of bread in a pile of rubbish in Gaza City. Pic: AP.
It is unclear how many of the GHF’s aid trucks will enter Gaza.
It claims it will reach one million Palestinians by the end of the week.
There are questions, however, over who is funding it and how it will work.
Trucks transporting aid for Palestinians in Rafah. Pic: Reuters.
It has been set up as part of an Israeli plan – rather than a UN distribution effort.
Israel, which suggested a similar plan earlier this year, has said it will not be involved in distributing the aid but supported the plan and would provide security.
It says aid deliveries into Gaza are taken by Hamas instead of going to civilians.
Aid groups, however, say there is no evidence of this happening on a systemic basis.
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Israel began to allow a limited amount of food into Gaza last week – after a blockade that prevented food, medicine, fuel and other goods from entering the Palestinian enclave.
A letter has been signed by hundreds of judges and lawyers calling on the UK government to impose trade sanctions on Israel.
It also calls for Israeli ministers to be sanctioned and the suspension of Israel from the UN over “serious breaches of international law”.
“Genocide is being perpetrated in Gaza or that, at a minimum, there is a serious risk of genocide,” the letter says.
The Israeli government has repeatedly dismissed allegations of genocide in Gaza.
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More than 52,000 Palestinians have been killed since Israel launched its ground invasion of Gaza, according to the Hamas-run health ministry, following the deadly attacks by the militant group on Israel, which killed 1,200 people and saw around 250 people taken hostage.
The health ministry’s figures do not differentiate between civilians and fighters in Gaza.
King Charles and Queen Camilla are being urged to use their visit to Canada to seek an apology for the abuse of British children.
Campaigners have called on them to pursue an apology for the “dire circumstances” suffered by so-called “Home Children” over decades.
More than 100,000 were shipped from orphan homes in the UK to Canada between 1869 and 1948 with many used as cheap labour, typically as farm workers and domestic servants. Many were subject to mistreatment and abuse.
Canada has resisted calls to follow the UK and Australia in apologising for its involvement in child migrant schemes.
King Charles and Mark Carney on Monday. Pic: PA
Campaigners for the Home Children say the royal visit presents a “great opportunity” for a change of heart.
“I would ask that King Charles uses his trip to request an apology,” John Jefkins told Sky News.
John’s father Bert was one of 115,000 British Home Children transported to Canada, arriving in 1914 with his brother Reggie.
“It’s really important for the Home Children themselves and for their descendants,” John said.
“It’s something we deserve and it’s really important for the healing process, as well as building awareness of the experience of the Home Children.
“They were treated very, very badly by the Canadian government at the time. A lot of them were abused, they were treated horribly. They were second-class citizens, lepers in a way.”
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John Jefkins
John added: “I think the King’s visit provides a great opportunity to reinforce our campaign and to pursue an apology because we’re part of the Commonwealth and King Charles is a new Head of the Commonwealth meeting a new Canadian prime minister. It’s a chance, for both, to look at the situation with a fresh eye.
“There’s much about this visit that looks on our sovereignty and who we are as Canadians, rightly so.
“I think it’s also right that in contemplating the country we built, we focus on the people who built it, many in the most trying of circumstances.”
The issue was addressed by the then Prince of Wales during a tour of Canada in May 2022. He said at the time: “We must find new ways to come to terms with the darker and more difficult aspects of the past.”
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King Charles and Queen Camilla are on a two-day visit to Canada.
On Tuesday, the King will deliver the Speech from the Throne to open the 45th session of Canada’s parliament.
Camilla was made Patron of Barnardo’s in 2016. The organisation sent tens of thousands of Home Children to Canada. She took on the role, having served as president since 2007.
Buckingham Palace has been contacted for comment.
A spokesperson for the Canadian government said: “The government of Canada is committed to keeping the memory of the British Home Children alive.
“Immigration, Refugees and Citizenship Canada deeply regrets this unjust and discriminatory policy, which was in place from 1869 to 1948. Such an approach would have no place in modern Canada, and we must learn from past mistakes.”
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