Extra windfall tax on energy giants would send 'wrong message', claims Liz Truss's team

The Foreign Secretary, who is the front-runner to be the next Prime Minister, has ruled out further taxes on the profits of oil and gas companies which are understood to be under consideration by the Treasury.

This morning the Chancellor, Nadhim Zahawi, and the Business Secretary Kwasi Kwarteng, are due to meet energy bosses to “knock some heads together” and hold them to account for their profits during the cost of living crisis.

“Windfall taxes send the wrong message to businesses,” a Truss campaign source told the Yorkshire Post. “They might secure more money in the short term, but in the long term all they do is create greater uncertainty and make businesses fear that they’ll be penalised for generating profits.

“What we need to do is keep taxes low, attract investment and do everything we can to secure our long term energy supply and encourage energy companies to invest in new technologies to deliver increased supplies and keep bills as low as possible.”

Rishi Sunak’s campaign did not comment on whether he would back further measures to tax profits as Prime Minister.

The Sun reported yesterday the Treasury was looking to expand the 25 per cent levy announced in May, with a Treasury source saying this “full fat” windfall tax would go “further and faster” on energy companies’ profits.

However, both the Foreign Secretary and Mr Kwarteng, who is expected to be made Chancellor should Ms Truss become Prime Minister, are opposed to the move, after they both opposed the original windfall tax in Cabinet earlier this year.

“Cabinet has agreed that there won’t be any new fiscal commitments or major announcements until there is a new Prime Minister,” a Whitehall source said.

Despite suggestions the expanded tax could be unveiled before the new Prime Minister is appointed, Middlesbrough MP Simon Clarke, Chief Secretary to the Treasury and a supporter of Ms Truss said options to tackle the cost of living should be made now.

“It is absolutely right to consider these options in the round when the new Prime Minister has taken office - rather than announce new un-costed policies, without sight of all the details of the pressures people could face, during a leadership election,” he tweeted.

A Government spokesperson said: “We are engaging with the electricity sector to ensure the market delivers better results for people across the UK. In the meantime, and announced in May, the government continues to evaluate the extraordinary profits seen in certain parts of the electricity generation sector.”