Chancellor Jeremy Hunt introduced a new tax on power generating companies of 45% on excess profits in this morning’s Autumn Statement. The “temporary” levy starts from January.
Separately he increased the Tories’ reluctantly imposed existing windfall clawback on oil & gas extractors by 10 points to 35%, extending it by two years to 2028.
Tasked with filling a void in public finances put at between £45 and £70 billion, much of it down the disastrous 23 September budget statement of his predecessor Kwasi Kwarteng, Hunt said his measures would raise £25 billion by April 2027. Added borrowing will raise another £30 billion.
For consumers, the Energy Price Guarantee now capping this winter’s typical energy bills at £2,500 per year, will rise in April to £3,000.
The Office of Budgetary Responsibility, the independent assessors of the Treasury’s measures today, now forecasts a 7% drop in real average living standards – the biggest annual fall on record – for Britons for each of the next two years. In effect today’s announcements wipes out all rises since 2010 in the average Briton’s private wealth.
Hunt sought to present his emergency measures as made necessary by events outside the UK. “There is a global energy crisis, a global inflation crisis and a global economic crisis. But today with this plan for stability, growth and public services, we will face into the storm,” the Chancellor told MPs.
“We do so today with British resilience and British compassion”.
Away from energy, the national living wage will be increased by 9.7% to £10.42 an hour, giving a full-time worker a pay rise of over £1,600 a year, benefitting two million of the lowest paid.
Higher rate income tax at 45% will kick in from April at only £125,140, down from £150,000. Thresholds sparking Inheritance Tax and National Insurance will be frozen for a further two years until April 2028, bringing in more payers. Other reliefs will be heavily cut: dividend allowance will be halved to £1,000 next year, and again from April 2024. Capital gains tax thresholds will follow the same halving, dropping to £6,000 next year and to £3,000 from April 2024.
From April 2025, electric vehicles will no longer be exempt from road tax.
Shadow chancellor Rachel Reeves for Labour lascerated Hunt’s numbers, accusing the Conservatives of “picking the pockets of the nation”.
On the windfall levy for energy companies, Reeves said the Tories had been dragged “kicking and screaming” towards a measure Labour had advocated since January.
Hunt’s moves still left billions of excess oil and gas earnings on the table, Reeves alleged. Uncorrected development write-offs for oil and gas firms continuing to exploit North Sea fields meant fossil fuel firms would continue to dodge tax. For every pound of windfall foregone, the Conservative chancellor was inflicting needless suffering on the nation’s voters, said the Labour front-bencher.
On mass home insulation, Reeves lambasted failures by premier Rishi Sunak when in Hunt’s post, cancelling in 2020 the Tories’ second aborted attempt in a decade at a national programme to plug Britain’s leaky homes.
Sunak’s failure had left insulation levels in 2021 twenty times lower than in 2010, laying waste to home energy bills and sacrificing thousands of skilled, valuable jobs, Reeves accused.
Even under today’s measures householders would have to wait until 2025 for better insulation, said the Labour’s chancellor in waiting.
On generation, said Reeves, the Tories continued to block onshore wind that could bring energy bills down. “Clean power is the solution to the energy price crisis, but still the Conservatives stand in the way”, said Labour’s aspirant chancellor.
Further details on Hunt’s Autumn Statement here.