Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of establishing a windfall tax on energy companies.

The Government is introducing the Energy Profits Levy, a new 25% surcharge on the extraordinary profits the oil and gas sector is making.

The new Energy Profits Levy will raise around £5 billion over the next year which will go towards supporting people with the new cost of living measures announced by the Chancellor.

As part of the levy a new tax relief is being introduced to encourage firms to invest in the UK. The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest.

The levy does not apply to the electricity generation sector. However, certain parts of it have also seen extraordinary profits partly due to record gas prices. As set out in the Energy Security Strategy, the Government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production. Those reforms will take time to implement. In the meantime, the Government is urgently evaluating the scale of these extraordinary profits and the appropriate steps to take.