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Boris Johnson rules out windfall tax on energy producers

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·2-min read
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A spokesperson for outgoing UK prime minister Boris Johnson said there were no plans to extend a windfall tax on energy generators. Photo: Vudi Xhymshiti/Anadolu Agency via Getty
A spokesperson for outgoing UK prime minister Boris Johnson said there were no plans to extend a windfall tax on energy generators. Photo: Vudi Xhymshiti/Anadolu Agency via Getty

Boris Johnson has no plans to extend a windfall tax on the profits of energy producers to help relieve the pressure of the cost of living squeeze.

The windfall tax proposals, which will be brought before parliament this week, won’t apply to electricity generators, a spokesperson for the outgoing prime minister (PM) said on Monday.

Windfall levies are a form of one-off taxation that can be placed on companies if they make unexpected profits from circumstances beyond their control.

Read more: Martin Lewis and charities seek standing charge changes as Ofgem plans reforms

Former chancellor Rishi Sunak, who also quit last week, floated the prospect of taxing electricity firms with a levy similar to the energy profits tax on North Sea oil and gas operators.

Last month, Sunak said the Treasury would impose a wider windfall tax on electricity generators, that could bring in billions of pounds to help households struggling with soaring food and energy costs.

Sunak told the Treasury Select committee at the time that the amount of extra borrowing needed to pay for the £15bn ($17.8bn) cost of living package will depend on a possible levy on electricity generators, given their extraordinary profits.

The plan was seen as jeopardising billions of pounds of investment in renewable generation, a key part of Britain's road to net zero emissions by 2050.

In May, Sunak unveiled a £15bn package to help alleviate the strain on household energy bills, funded partly by a £5bn windfall tax levied on oil and gas giants.

Read more: Windfall tax: What is the policy announced by Rishi Sunak 

When asked whether the windfall tax that is being introduced for oil and gas producers would be extended to electricity generators, the spokesman said: "We would not seek to make any new policies or major fiscal decisions. So there's no plans to do that.

"We will continue to evaluate the scale of the profits and consider appropriate steps but there's no plans to introduce or extend that to that group."

The move comes as Johnson announced he was stepping down following a revolt by members of his Conservative party. The PM isn’t supposed to make new policy decisions while he’s in a caretaker role.

Shares in UK utilities climbed following the announcement. London-listed Drax Group (DRX.L), FTSE 100 (^FTSE) energy firms SSE (SSE.L) and British Gas owner Centrica (CNA.L) all rose 6.2%, 3.4% and 3.6% respectively on the news.

Watch: Why are gas prices rising?

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