Labour calls on government to close £17bn ‘loopholes’ in energy windfall tax

Pressure mounts on Rishi Sunak to lift effective ban on new windfarms

Labour today accused the government of “botching” its windfall tax on North Sea oil and gas companies by leaving loopholes which the party calculates will cost the public finances £17bn.

In a challenge to Jeremy Hunt, Labour is today tabling an amendment to the bill enacting the chancellor’s autumn statement, demanding that he spell out the full cost of windfall tax allowances for fossil fuel firms.

Shadow chancellor Rachel Reeves said that the sums which could be raised by ditching the allowance – as well as backdating the windfall tax to the start of 2022 and matching Norway’s 78 per cent levy on its North Sea firms – was the equivalent of three years’ turnover for the UK wind power industry and could pay for the insulation of 6 million homes.

Her comments came as pressure mounted on Rishi Sunak to lift the effective ban on onshore windfarms in England.

Some 32 Conservatives have now signed a rebel amendment to allow onshore developments, with former cabinet ministers Nadine Dorries, Wendy Morton and Julian Knight bringing the tally close to the number needed to inflict Mr Sunak’s first Commons defeat as PM.

And a rival Labour amendment could go further, placing a duty on local authorities to identify potential sites for turbines.

Downing Street played down suggestions of an imminent U-turn on the onshore windfarm restrictions, which are so onerous that planning applications have dwindled almost to zero since their introduction in 2015.

Tory MP and former government whip Craig Whittaker told the Commons the policy was “stifling growth, stifling our march for net zero, and stifling our quest for security of supply”.

And shadow climate change secretary Ed Miliband said the policy is adding £150 to average household energy bills.

By doubling the UK’s onshore wind capacity, the government could save energy customers a combined total of £16bn by the end of the decade, he said.

But energy secretary Grant Shapps responded that it would continue to be the case that wind farms could be sited on land only “where there is local consent”.

Mr Miliband blamed Tory leaders since David Cameron for indulging “dinosaurs” on the Conservative benches who put a halt on the development of a technology viewed by environmentalists as the cheapest and cleanest source of electricity for the UK.

Mr Sunak himself vowed to maintain the ban as he battled for the votes of Conservative Party members during this summer’s leadership contest.

“The ban on onshore wind in England that they put in place in 2015 has raised bills for every family in this country by £150 each,” said Mr Miliband. “And keeping the ban in place up to 2030 would mean customers paying £16bn more on bills compared to a target of doubling onshore wind.”

Tabling Labour’s windfall tax proposals, Ms Reeves accused the government of making working people foot the bill for soaring energy prices.

She released analysis suggesting that the removal of allowances which save North Sea companies 45p for every pound they invest in fossil fuel extraction would raise £10.6bn over the six-year lifespan of the temporary windfall tax.

And she said that the government could have raised £2.6bn by following Labour plans to backdate the levy to the start of 2022 and £3.6bn by setting it at the Norwegian level of 78 per cent rather than 75 per cent.

“Britain deserves a government that will make fairer choices in the interest of working people,” said Ms Reeves.

“When it comes to the next election, the question people will be asking themselves is this: do I and my family feel better off under the Tories?

“With choices like this, the answer will be no.

“Labour would be making fairer choices – fairly taxing the windfall profits of war, instead of diving into working people’s pockets first.”