A FURIOUS Douglas Ross has warned the Chancellor against extending the windfall tax in today’s budget, amid reports that the Chief Whip and Scottish Secretary were forced to “talk him down” following talks with the Prime Minister and Chancellor.
The Scottish Conservative leader is one of a number of North-east Tories, including energy minister Andrew Bowie and energy spokesperson Douglas Lumsden, to have publicly opposed the 75% levy on profits made by energy companies.
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However, it’s thought in order to help fund a 2p National Insurance (NI) cut, Jeremy Hunt will extend the Energy Profits Levy (EPL) by a further year to 2029 during this afternoon’s budget.
The Telegraph reports that Mr Ross was embroiled in a “heated” discussions with Rishi Sunak during a pre-Budget drinks reception on Monday evening.
A conversation with Jeremy Hunt followed, in which Ross reportedly urged him not to extend the EPL, warnings that ultimately fell on deaf ears.
Simon Hart, the Chief Whip, and Alister Jack, the Scottish Secretary, were then tasked with meeting Mr Ross to “talk him down” amid fears that he would quit, according to the paper.
Speaking to BBC Scotland’s Podlitical podcast, Mr Ross said any extension from the Chancellor will be the “wrong decision”.
“What we need for oil and gas companies is certainty going forward. A further extension doesn’t provide that certainty.
“So I’ve made the case very strongly to the chancellor that, if he chooses to go ahead with this, then we’ve got to see what other measures are in place to provide that certainty and security to the oil and gas companies.
“I understand the challenges that he is facing, but I’m not going to shy away from publicly saying I think an extension to the windfall tax would be wrong.
“I’ve said it privately to the chancellor, to the prime minister, to senior ministers and I’m saying it publicly.
“I’m not trying to in any way run away from this.
“If that (an an extension of the levy) happens, I think it will be the wrong decision by the chancellor and I have further meetings to continue to make that case.
“I’ll continue to do that until just before half past 12 tomorrow when the chancellor stands up to give the statement.”
What are Hunt’s plans?
Increasing EPL will help pay for the UK-wide 2p NI cut that the Chancellor is expected to announce today, worth £450 on average.
But it may mean that projected increases for future public spending will be cut from 2% to 0.75%.
Tax breaks for people with second homes let out as holiday rentals is reportedly set to be reduced.
But the cut to NI will likely headline the Budget, and with legislation to enable the cut comes into effect in April being brought forward next week, talks of a May election are increasing.
An extension to the current EPL rates would mean the 75% rate of tax would be paid until 2029, the same extension proposed by Labour, although Sir Keir Starmer’s party also want to increase the rate to 78% and remove investment allowances.
Ryan Crighton, policy director at Aberdeen and Grampian Chamber of Commerce, said: “The windfall tax needs to go. The North Sea is being used as a cash cow to plug financial holes created by the financial mismanagement of others – and Aberdeen, which now has the lowest growth of any UK city, is clearly paying the price.
“Businesses in the North-east are watching through their fingers as politicians of all parties fall over themselves to make things worse.
“After years of stagnation, the UK economy desperately needs investment to grow. North Sea firms are standing by ready to invest £200billion – but they need the right conditions. Jeremy Hunt has the chance to put that right on Wednesday.
“This saga again highlights why we need a seismic shift in how we draw up long-term energy policy in this country.
“Right now, we are at risk of the North Sea oil and gas industry being wound down through rhetoric, rather than strategic policy. If we simply tax it to death, it will be as chaotic as it will be economically damaging.
“We need a new body, entirely independent of government, to set a policy direction for the next 40-years. Like the Bank of England – which has maintaining monetary and fiscal stability as its central mission – the new body should be charged with developing recommendations which could command cross-party consensus and insulate the sector from political policy shocks in the future.
“If nothing changes, and we get more of the same muddled policy, discretionary capital will continue to move overseas, the transition will stall, and a world class supply chain built up over decades will go. We can – and must – do better.”
