Last month, the UK Chancellor, Rishi Sunak, issued a warning that he was considering a windfall tax on power generators. The proposed levy could potentially help raise billions of pounds’ worth of financial support for struggling households trying to cope with rising utility bills.
However, the option has received considerable criticism from the Labour Party. It believes that the last-minute threat of imposing a windfall tax on UK energy firms could damage investment plans, as it has already taken £3 billion from their share price.
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The Chancellor’s proposed plan would involve a 25 per cent tax on the considerable profits made by energy generators such as oil and gas companies in the North Sea, and it would come into effect later this year.
While Labour originally championed the proposal, it has now been outspoken on the harm such a move could cause to the investment environment for brand-new energy projects in Britain. It highlighted dramatic drops in share prices for firms that would be impacted by the levy, such as SSE, Centrix and Drax.
Despite this, the British government is relying on energy companies like SSE to move ahead with new initiatives for clean energy like nuclear plants and offshore wind farms to strengthen energy sources here in the UK.
