Business Secretary Grant Shapps hints at autumn budget windfall tax expansion on energy firms due to ‘unexpected profits’

Published

3 years ago

November 7, 2022

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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.

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.

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.

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.

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Tesla approves $29bn share award to Elon Musk

Published

11 hours ago

August 4, 2025

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Tesla approves bn share award to Elon Musk

Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.

The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.

The new stock will also bolster his voting power from a current level of 13%.

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He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.

Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.

The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.

The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.

Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.

But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.

Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.

The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.

It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.

The new compensation package is subject to shareholder approval.

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Motor finance operators can breathe big sigh of relief

Published

11 hours ago

August 4, 2025

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Motor finance operators can breathe big sigh of relief

Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.

Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.

It came after the court delivered a reprieve from a possible £44bn compensation bill.

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Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.

The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.

Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.

Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.

The judgment released some of the anxiety that has been weighing over the Bank’s share price.

Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.

Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.

Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.

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FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists

Published

1 day ago

August 3, 2025

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FCA considering compensation scheme over car finance scandal - raising hopes of payouts for motorists

Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.

In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.

The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.

It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.

The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now.”

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

The FCA has said any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

It has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.

The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.

In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.

This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.

It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.

Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.

“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”