Rishi Sunak and Jeremy Hunt are preparing to raise the windfall tax on oil and gas company profits to generate an additional £40bn for Treasury over five years, according to reports.
The prime minister and chancellor are scrambling to find ways to plug a potential £50bn-a-year black hole in the public purse before Mr Hunt’s 17 November autumn statement.
With energy firms declaring huge profits for the last quarter – BP doubled to more than £7.1bn, Shell more than doubled to £8.2bn – pressure has been mounting for an enhanced windfall tax to help fill the Treasury coffers.
A tax on the abnormally high profits of oil and gas firms during the past year’s energy crisis was first introduced in May by Mr Sunak as chancellor, despite his initial reluctance.
Mr Sunak and Mr Hunt want to increase the rate of the levy from 25 per cent to 30 per cent, extend the collection period to 2028 and expand the scheme to cover electricity generators, according to The Times.
The paper said the prime minister and chancellor met on Wednesday afternoon to discuss ideas for the autumn statement, which are due to be submitted to the Office for Budget Responsibility (OBR) by the end of the week.
Mr Hunt will deliver his statement alongside an OBR forecast to reassure markets after criticism of his predecessor, Kwasi Kwarteng, for pitching a huge economic plan without independent assessment.
The chancellor is understood to be looking for a balanced mix of tax rises and spending cuts to attempt to repair the economy after Liz Truss’s disastrous mini-Budget.