The government’s autumn statement has been criticised for failing to close loopholes in the windfall tax and for delaying extra spending on home insulation for three years.
The chancellor, Jeremy Hunt, increased the windfall tax on oil and gas industry profits. But he still allowed companies to claim back more than 90p in the pound on investment in oil and gas developments.
Campaign groups and Labour said the proposals were “too little, too late” that “did not live up to the hype”.
Key points
Windfall tax Mr Hunt increased the windfall tax on oil and gas profits (the energy profits levy) to 35% from 1 January 2023 on all profits. This is up from the previous rate of 25%. But Mr Hunt chose not to close the tax loophole on oil and gas investment. The investment allowance was reduced from 80% to 29% but the amount that companies could claim in tax relief actually rose slightly from £91.25 under the previous windfall tax to £91.40 for every £100 invested. The windfall tax is expected to end on 31 March 2028 and raise more than £40 billion in the next six years, the government said.
Building insulation £6bn will be made available from 2025-2028 for energy efficiency. An energy efficiency task force will seek to reduce UK energy in buildings and industry by 15% by 2030, compared with 2021 levels.
Tax on low-carbon electricity generation An electricity generator levy of 45% was introduced on low-carbon electricity generation above £75 per megawatt hour. This will include wind, solar and nuclear from 1 January 2023 but excludes gas and coal electricity generation.
Energy price cap The energy price guarantee was raised so that a typical household is expected to pay £3,000 a year in gas and electricity, up from the £2,500 which continues until April 2023. The government said this equated to £500 in support for every household.
Other payments Pensioner households are to get an extra £300 to help with cost-of-living increases in 2023-4. Households that use oil for heating will get £200 a year, up from £100.
Investment zones scrapped Mr Hunt said the government would “refocus” this programme. It would concentrate on a “limited number of the highest potential knowledge-intensive growth clusters”.
Reaction
“Failed to close massive tax break loophole”
Shadow chancellor, Rachel Reeves
“After months of resistance from this Prime Minister, the Government have finally been dragged, kicking and screaming, to extend the windfall tax that Labour has been calling for since January. Yet they still leave billions of pounds on the table, profits that are the windfalls of war, because they have failed to close a huge loophole that they created that hands out massive tax breaks to those oil and gas giants for doing the things that they were going to do anyway.”
“Insulation and windfall tax announcements don’t live up to the hype”
Greenpeace UK political campaigner, Ami McCarthy
“The Chancellor may be making the right noises around home insulation and the windfall tax, but the action doesn’t live up to the hype. Increasing taxes on the obscene profits of oil and gas giants is the right thing to do, but allowing huge tax breaks for more fossil fuel drilling is one step forward and two back. The government could lose billions in revenues while turning a fairness tax into an incentive to fuel the climate crisis – and during a major climate summit! Instead of going to increase the problem, this money should fund solutions, including better support for millions of households still struggling to pay their bills.
“The Chancellor also paid lip service to home insulation, but where’s the emergency plan we need to fix our draughty, energy-wasting houses? A promise of more money in three years’ time helps no one. The government should launch a nationwide warm homes programme now that can save households £10bn a year on energy bills and lift people out of fuel poverty. The sooner we get going the sooner we’ll reap the rewards of more affordable bills, more energy security and more stable climate.”
“People need help with insulation now”
Climate campaign organisation, We Are Possible
“The Autumn Statement announcement of £6bn for home insulation is welcome, but 2025 is too late. People need support now, not in two years’ time. Oil and gas companies continue to reap eye-watering profits while the climate and people across the UK feel the burn. A bigger windfall tax on oil and gas companies would provide the funds we need to keep everyone warmer this winter by insulating our homes and cutting bills.”
New Economics Foundation
“With temperatures dropping and energy prices spiralling out of control, today’s home insulation and energy efficiency announcement is long overdue, but we can’t afford to wait years for this money to kick in.”
“Too little, too late”
Friends of the Earth head of policy, Mike Childs
“A nationwide energy efficiency drive is essential, but the Chancellor’s proposals are far too little and far too late. Kicking the can down the road on home insulation for another two years, means millions of people will continue to suffer cold homes and sky-high energy bills.
“The government should have listened to its own climate advisors, the Climate Change Committee, who only last week called for an urgent and rapid roll out of loft and cavity wall insulation.
“A £5 billion a year street-by-street, home insulation programme, focussing on those most in need first, would reduce the nation’s use of expensive gas, slash energy bills, create jobs and cut carbon emissions.
“It’s a scandal that even with emergency financial support millions of people are still being left to shiver in heat-leaking homes due to soaring energy bills. With the price cap set to rise from next April, urgent action is needed to protect those most at risk.”
“While an increase in the windfall tax is welcome, it is undermined by the Chancellor’s failure to close the loophole that allows fossil fuel firms to avoid paying most of it if they invest in more gas and oil. We won’t build a clean, green and prosperous future while we continue to subsidise our reliance on fossil fuels.”
“Clawback more oil and gas profits”
Tessa Khan, executive director of Uplift
“The rise in the windfall tax on oil and gas companies is long overdue, though the UK is still taxing the industry below our neighbours. But despite millions more people facing the prospect of not being able to heat their homes, the Chancellor has chosen to continue to give enormous handouts to oil and gas giants making billions in profit.
“Beyond being obscenely unfair, the loophole in the windfall tax – which the government has only made bigger today and which lets giants like Shell escape the tax if they invest in new North Sea fields – means the government is doing the exact opposite of what’s needed to get us out of this hole for good. New UK gas fields will not lower bills but will only keep us locked into an expensive energy source far longer than necessary.
“Tackling the root cause of much of the UK’s pain – our high dependency on gas – must be a priority and Hunt is right that energy efficiency is key. But the money put aside for it is wholly inadequate and must come sooner than 2025. Even more so when you consider the government is planning to effectively give a half a billion pound subsidy for the development of Rosebank, an oil field that will do nothing to lower bills or boost energy security.
“The Chancellor must close the loophole and claw back more of these profits and use that money to insulate homes now. Not only would that lower the energy bills of millions of people, it would be cost neutral to the Treasury.
“The windfall tax on electricity generators needs to be done with great care so as not to deter investment in what is now our cheapest source of energy. Seven million households are in fuel poverty now because of unaffordable energy bills. Come Spring these figures will balloon as the energy bill support is withdrawn. The government needs to be completely focused on helping the public and not oil and gas companies.”
“Protesters got insulation policy on the agenda”
Extinction Rebellion
“Today’s Autumn Statement budget for insulation could be better, but would not be there at all, without those who served prison time for getting a common-sense policy to help with costs and climate on the agenda.
Wera Hobhouse MP, Liberal Democrat
“I asked the chancellor about why he has glossed over immoral tax loopholes for oil and gas companies in today’s Autumn Statement – and who is benefiting from them. I know that it cannot be those struggling under the cost of living crisis. It is those profiting from it.”
Caroline Lucas MP, Green
“Glad windfall tax is being increased – but it’s scandalous that Chancellor is keeping the investment allowance, giving a massive subsidy to obscenely wealthy oil and gas companies. Fossil fuels must stay in the ground – why is this government funding climate destruction?”
“Previous insulation schemes have been piecemeal and confusing”
Environmental Audit Committee chairman, Rt Hon Philip Dunne MP
“I welcome the pledge of an extra £6 billion investment in energy efficiency measures but not until 2025. Tackling energy efficiency will be no easy feat: there are around 19 million homes across the UK in need of energy efficiency upgrades that contribute to a colossal 20% of our greenhouse gas emissions. To date, the Government’s approach has been piecemeal and nowhere near sufficient to rise to the challenge. While positive in their ambition, the numerous schemes can be confusing to consumers to know what they are eligible for and the stop-start approach of programmes over the years has bruised industry. This must end: the opportunity of a properly coordinated energy efficiency programme can boost jobs, skills and growth in local economies and get us on the path to net zero.
“I hope the energy efficiency taskforce being brought in by the Business Secretary is up for the challenge. I urge the Government, when designing the taskforce, to engage properly with the industry that has got to deliver this reduction to make sure we have a scheme that will actually work, will endure and deliver reductions in cost and emissions at household level. Unfortunately the Chancellor’s predecessors in the Treasury and in Department for Business, Energy and Industrial Strategy have not addressed this adequately in previous energy efficiency schemes.”
- The UK onshore oil and gas industry has not commented publicly on the autumn statement
DRILL OR DROP? 
Procrastination is the thief of time – time needed to mitigate the now inevitable effects of past and current neglect of the overwhelming evidence of climate deterioration, time needed to ‘ persuade’ the polluters to abandon their planet-destroying pursuit of personal gain, time needed to convince the deniers that there is no future in supporting fossil fuel exploration and development, time needed to build up the alternatives to self-inflicted extinction. Global warming does not allow for half-hearted, half-baked response. The planet cannot afford this Tory government.
Who are the polluters though? And who is pursuing personal gain? It looks to me that anyone engaged in the modern economy (which means every man, woman and child) is the actual polluter. And, at least wherever there is any discretion in their activity, they are acting for personal gain.
Anyway, I feel the kind of societal shift “the planet” requires is far beyond simple demonisation. In fact that approach is starting to become quite counter-productive – see for example how people are dismissing the antics of demonstrators. Most of us are far too used to being lied to, or misdirected, to not suspect that games are being played and to conclude that only the naive succumb to hysteria.
I don’t know the way forward, but I do feel we all benefit more from a thoughtful and positive attitude than from despair. I have felt very positive for some years, wearing many layers in the winter rather than using the heating, walking wherever I can, rarely using my car, eating very little meat, always thinking of efficiency right down to optimising the level of water in my kettle. It’s actually quite fun.
Actually I do know a couple of things that I feel would help massively:
1. Limit the reach of advertising! It’s far too ubiquitous. And I think it produces a society addicted to consumption.
2. Stop trying to keep up with the Jones! There’s such a sense of freedom in desiring nothing very much of this world.
3. Do what you love. Work less and earn less, live more simply, give up your excesses and your vices. With less energy on tap we’re going to contract economically anyway.
I would also add, without wishing to instil further despair, that I read somewhere that India produces as much CO2 as UK, France and Germany combined. And India has a much younger demographic, growing, building coal power plants by the dozen, wanting everything the West has for its own people, and so on. I’m not sure blaming the tories is going to fix those issues?
Thank you, Tom, for the thoughtful comments. My posts are not intended to be negative, although I agree they sometimes come across in this way. You are right, I believe, that in a sense we are all polluters, although, “discretion in activity” is important, and I meant the term in a narrower sense referring to those conscious of the harm they do in developing that which kills us rather than turning attention to that which alone can save us. This they do, I suggest, not out of altruism or because they have to, but to secure personal advantage. In this respect, I don’t think they have moved on from the advertisers of tobacco products. Greenwashing is very much alive and kicking. I’m afraid that in this respect I do hold Tory ideology responsible, eschewing, save verbally, the whole idea of the common good – an idea to which the left at least pays a little more than lip service.
I agree with your “couple of things”.
I remain hopeful for humanity, notwithstanding the difficulties.
Thank you again.
Tom, regarding your kettle, you would do better, energy wise, boiling it full of water first thing in the morning, putting all but your first cupful in a thermos, and then using the water from your thermos for the rest of the day.
I do find it interesting that the usual suspects call for the fossil fuel companies to bail them out, when they have been slagging them off for some years! Perhaps that indicates their rush, without a joined- up plan, towards their utopia has failed. Except, no admission of failure at all, and a nonsense about arithmetic again. There is a level of taxation for N.Sea which will reduce exploration. There are plenty of cheaper places to explore around the world. More taxation upon less activity will produce less windfall tax revenue. Instead of also slagging off international companies paying little or no windfall tax someone should ask the question are those individual companies actually that involved in the N.Sea? If not, why not? Could it be that costs of extraction are high and so is taxation? Could be and is, but hysteria is better.
As for insulation, where is the question regarding the level of insulation in UK housing stock? Ask it, and the answer is much improved. Could be better still, but much improved. Just another part of the smokescreen. My property is fully insulated. My heating is on. Others are not so fortunate, so I help them out. It is a social contract that has always been expected to be fulfilled. It is actually fulfilled better in UK now than for any time in history, and better than in most countries. Excluding Norway for one, but better not go there because the reason is rather unpalatable for certain individuals and groups.
“Personal Gain?” Another smokescreen, to attempt to distort. I have spoken to landowners who hated the idea of industrializing their farms by plonking wind turbines on them-until they were guaranteed over £100k net profit per year each, whether the electricity was required, or not. Then the bird population was expendable. The tranquility of the countryside equally. Then, the fact they were built could be advertised as to how the new technology had been embraced! Still being proposed by the usual suspects, who seem to have missed that turbines at sea can be built now with all the advantages of scale, and more wind. Cash for Ash in N.Ireland-personal gain. High cereal prices from use of cereals to produce fuel for motor vehicles, then high food costs for consumers-personal gain. Kids in DRC scraping up cobalt and suffering the health consequences yet being paid a pittance-personal gain. Many more.
How about producing a joined- up plan, instead of blaming others when the cobbled together one fails? Where is the apology for that? No apology, just find someone else to blame-such as the Tories, or more ironically, the fossil fuel companies. How about blaming whoever decided upon a course that would produce such high diesel prices currently in UK, whilst diesel is still the fuel most used for distribution of raw materials and goods?
Energy costs were always going to rise post Covid. The reasons for that are obvious. Putin has deliberately exacerbated that so the reaction is?
Attempts to create hysteria and despair around the issue to promote particular lobbying groups agendas.
But, Tom, I am with you, there is more to be joyful and thankful about. Having been previously in marketing, Tom, I would suggest the issue is not with advertising it is with the consumer. There have always been “followers” that advertising will get most bangs for their bucks from, but the Internet has provided a much better way to target them. Buyer needs to beware, and if not, be responsible.
For Jono, I hope you are now recovered from your NHS experience. Mine, yesterday, was exactly the opposite I would like to post to show the NHS can get it right.
Fast tracked appointments, arrived early for them, was still seen without waiting at all, in brand new facilities, and was provided with results immediately, with full recommendations. Even free parking-down to the company installing the new charge points failing to get them to work!
Glass half full- and heating on. Thank you, oil and gas companies for providing the discount so I do not have to worry too much about that. Looks as if the heavy lifting is with you for some time to come. Now, there’s a surprise-except it isn’t if the buyer was aware.
Talking of that, with current oil prices being very similar to what they were pre- 2014, why the big difference in petrol prices?
It is not clear if the Chancellor has made provision for the possible inflationary effects of gas and diesel price rises.
The IEA describes the diesel market as extremely tight. The EU will ban Russian crude oil exports from early December and oil products (eg diesel) from early February. In the USA there are fears of a shortage in the Eastern states and suggestions that Biden may be forced to limit US diesel exports (not so likely this year but more so nearing the election). The COVID situation in China is uncertain, cases are rising at 10% a day. The situation is probably that continuing rigid containment restricts industrial demand and therefore lowers prices worldwide, and viva versa. Even before COVID and the War, refining capacity was declining whilst demand was robust. There has been insufficient investment in replacing lost capacity. That is understandable, why why invest in what may become a stranded asset. Seems to me the cost of preparing for 2050 is major problems in the late 2020’s. Diesel, is of course, whether you like it or not, the lifeblood of trade in the U.K. with 20% of lorry movements being food related.
With regard to gas there is currently an effort in the EU to agree a Europe-wide import price cap to avoid inflationary bidding war between countries. The civil servants have been tasked with developing a scheme to put before the Commission at the end of this month. Some countries favour such a unified scheme but others, such as Germany, fear that a price cap set too low will simply send cargoes of gas to more profitable destinations. I’m not sure if the U.K. would wish to take in such cargoes.Fully laden gas tankers are already lying offshore waiting for the winter market to bring up prices. In Germany the government is preparing for “aggressive discontent” and planning for power outages, for example by greatly expanding the availability of cash.
Very much doubt oil and gas companies are going to leap at the chance to pay 75% tax on their profits! Whatever the incentives are for investment (which rarely provides a return in the NS anyway.) And all this while oil and gas prices have returned to pretty moderate levels: $90 oil is not particularly high, especially when costs have risen significantly, and the day-ahead price that the gas producers typically receive is a fraction of the headline numbers.
On top of that, companies may have funded investment with debt, with lenders requiring them to effectively sell ahead at historical (lower) prices. Will they be able to pay back that debt?
This looks very much like a plan to deter oil and gas investment, so I’m not sure why it should disappoint anyone in favour of that end.
We are very fortunate that none of the entities quoted above are in Government. The usual moans but no costed alternatives that will work.
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Interesting little tale regarding reality. A close relative recently wanted to return to the workforce. No qualifications, but immediately offered several jobs after applying. Decent wages, working conditions and flexible working hours to suit. Her glass is also half full. She is too old to be influenced by a petulant child, she has dealt with four of them, and is a happy bunny to let them be angry at their leisure and their expense.