Chancellor Jeremy Hunt branded the oil and gas industry “losers” in his own budget, one day after extending the windfall tax on their profits for another year.
His decision on Wednesday caused anger among industry figures – and totally contradicted Scottish Tory leader Douglas Ross’s key electoral message in the region.
“Who are the losers?” said Mr Hunt, responding to a question on BBC Radio’s Today programme.
“Foreigners who are resident in the UK who were able to pay a cheque and avoid paying tax at the same rate as everyone else, the so called non-doms. They are going to pay significantly more tax.
“I’ve also asked the Scottish oil and gas industry to pay an additional contribution because the war in Ukraine is lasting longer. Oil and gas prices are going to stay higher for longer.
“I think it’s fair they can make an additional contribution to the cost of living.”
Cutting the levy on energy profits was a central demand of the Scottish Tories in the north-east, and was supposed to be a clear line with Labour and the SNP.
But Moray MP Douglas Ross failed to convince the Treasury, leaving him red-faced after spending days condemning Labour’s plan to extend the tax.
The levy charges oil and gas companies an extra 35% tax on the money they make in the UK. It was due to end in 2028.
Mr Hunt said the levy will go to 2029 and raise an extra £1.5 billion.
Stunned north-east Tories
Scottish Tories were stunned, a few days after boasting of support for oil and gas businesses in their party conference in Aberdeen.
In another awkward twist, they had planned a debate in Holyrood at the same time as the budget entirely focused on their support for oil and gas.
One senior Tory told the P&J that anger is now turning on Mr Ross – a party leader and MP who “should be able to be heard” in London.
UK Government energy minister Andrew Bowie – the MP for West Aberdeenshire and Kincardine – is also in a difficult position.
He would have to lose his government job if he votes against the measure.
On Sunday, he’d told the P&J he expected the tax to be cut or even ditched.
In a round of interviews on Thursday morning, Mr Hunt denied he’d thrown north-east colleagues “under the bus”.
But he added: “I appreciate it was a difficult decision for them.”
He said the UK Government supports the oil and gas industry and continued: “I also had to be fair looking at the public finances, looking at the fact that I have spent – taxpayers have spent – £94bn in cost-of-living support, helping pay around half people’s electricity bills over the last winter, and reflecting the fact that because high oil and gas prices have lasted longer than was anticipated at the start of the Ukraine war, they are making additional profits they weren’t expecting to make.”
The row was a feature of first minister’s questions on Thursday afternoon at Holyrood.
‘Man-child’ outburst
SNP leader Humza Yousaf tried to make Mr Ross uncomfortable by saying the Tory was in tune with public opinion “for the first time” in criticising the budget.
Mr Yousaf called the overall budget a “betrayal”.
And in another unwanted distraction, Mr Ross was branded a “manchild” in a bizarre parliamentary outburst.
Audio from the rowdy Holyrood session picked up the phrase, apparently from SNP minister and former Moray MP Angus Robertson.
Writing in the P&J on Wednesday, Mr Ross said he would fight tooth and nail against the levy extension.
Speaking to journalists in parliament on Thursday, he added: “It was the wrong choice. I made that clear throughout last week. I put that case as robustly as I could. I still believe the Chancellor is wrong. He has made the wrong choice.”
On the impact at the general election, he said: “Most people will be looking at what the other parties are suggesting.”
He claimed Mr Yousaf has a “confusing message” on oil and gas, drawing attention to the SNP’s Green party coalition partners.
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