Cost of living: Hereford MP Jesse Norman wants windfall tax

Prime Minister Boris Johnson has come under pressure to introduce a one-off levy on firms which have benefited from globally high oil and gas prices and use the revenue to fund measures to ease the cost-of-living crisis on households struggling with rising bills.

Chancellor Rishi Sunak has not ruled out the tax, though Northern Ireland Secretary Brandon Lewis said such a move “doesn’t really work”.

“It puts off investment both in that sector and, absolutely, the risk in others,” he told the Telegraph.

“So we’d be very, very wary of a windfall tax. What we want to see is companies using the money they’ve got to invest, particularly in that industry.”

But Hereford and South Herefordshire's Conservative MP Jesse Norman would like to see a windfall tax to help tackle the cost of living crisis.

He said few would embrace the idea with enthusiasm in normal times, but "these are extraordinary times, and the arguments against it at present are very weak".

Mr Norman said a new Oil and Gas Levy would need to be temporary and well defined.

As several present and former oil and gas chief executives have said, it would not much change companies’ investment plans or the incentive to invest.

"These are not profits any firm was relying upon before February 2022," he said.

"Such an Oil and Gas Levy would be equitable. First, if it were not implemented, then any revenues would otherwise have to be derived from sources that might well make the current cost of living crisis worse for many people.

"And second, many commentators seem to have forgotten that the Government hugely supported the Oil and Gas sector when tens of thousands of jobs were at risk after the oil price crash in 2014."

He added: "It is also quite wrong to say that a Levy or tax of this kind would be unconservative. On the contrary, it would be both ethically principled and pragmatic. And it would burden future generations less than incurring more debt."

In the long Twitter thread, Mr Norman finished by saying: "Finally, for what it is worth, although she rightly would not have liked the idea much, I have no doubt Margaret Thatcher in her pragmatic prime would have levied a limited and temporary tax of this kind.

"Indeed she more or less did, in 1981 and again in 1982."

The news comes as the Hereford Times, and its publisher Newsquest, launches its #YourMoneyMatters campaign to try and combat the crisis.

At The Hereford Times, we’re making it our mission to look out for your cash, offering money-saving deals, competitions, giveaways and insightful stories from your community on the impact this cost of living crisis is having on our readers like you.

The worldwide energy crisis exacerbated by the Ukraine invasion, financial impact from the Covid pandemic, record inflation figures and a surge in the cost of goods, fuel and travel means we will all feel the pinch.

Through our newspaper, we want to do what we can to help make your cash go further because we know your money matters.

Health Secretary Sajid Javid also weighed in, saying he is “instinctively” opposed to imposing the levy.

Addressing the Welsh Conservative conference on Saturday, Mr Javid said: “You just mentioned the windfall tax idea. Instinctively I don’t like it. I just think we’ve got to be really careful.

“As a country, we have a very hard-won but strong reputation on being pro-business, welcoming investment.

“Businesses like certainty and of course there’s no such thing as pure certainty, but when it comes to taxes, I think we’ve just got to be really careful with these sudden taxes that could have an impact in the long term that we would come to regret.”

Mr Johnson has said he cannot “magic away” all the soaring food and energy expenses, instead vowing on Friday to use the “firepower” of the Government to “put our arms around people” as it did during the coronavirus pandemic.

Jacob Rees-Mogg, meanwhile, has also mounted opposition from within the Cabinet as he argued it is wrong to raid the “honey pot of business”.

Labour leader Sir Keir Starmer argues a Government U-turn on opposition to a windfall tax is “inevitable” as it would “raise billions of pounds, cutting energy bills across the country”.

The idea of a windfall tax has gained popularity because energy firms are seeing soaring profits due to rising consumer prices, as fuelled by the pandemic and the war in Ukraine.

Labour has argued a windfall tax could fund a VAT cut on energy bills and an increase in the warm home discount for those on a low income.

Offshore Energies UK, the energy industry’s trade body, has said the tax would put investment and jobs at risk.