Rishi Sunak’s fiscal strategy is ‘risky’ says Ed Balls

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If enacted, the windfall tax would apply to excess profits by electricity generators. It would also see wind farm operators forced to pay up a percentage of their greater profits.

The Government has previously expressed reluctance to impose such windfall taxes.

Boris Johnson recently stressed: “I’m not attracted intrinsically to new taxes.”

But he added that “no option is off the table”.

Mr Sunak issued a very similar message, noting he was “not naturally attracted” to the idea.

Officials have now, however, been asked to draw up plans which would reportedly go further than new taxes demanded by the Labour Party.

One Government insider told the Financial Times: “North Sea oil and gas producers are only half the picture.

“The other half is that high gas prices have led to some pretty substantial windfall profits for all electricity generation.”

Labour said its proposed windfall tax, which would apply only to North Sea oil and gas producers, wouldn’t raise around £2billion, from more than an estimated £11billion in windfall profits.

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Whitehall understands that electricity producers have possibly made about the same in excess profits due to higher gas prices, so could, if taxed on these, be told to hand a large sum to the Treasury.

An ally of the Prime Minister said, however, the plans were only intended to measure whether a windfall tax would be effective and that no definite decision had yet been made.

They told the Financial Times: “We would only do it if we conclude it’s the only way to fund something we conclude has to be done.”

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A decision could be revealed this week or in early June, according to its report.

Some have questioned the timing of the announcement, which came just hours after pictures emerged which appeared to show Boris Johnson drinking with others during lockdown.

Financial journalist Hannah Godfrey joked: “Ok who had ‘release policy to help with cost of living on the same day as the latest Partygate revelation’? Oh, all of us, ok.”

Writer Daniel Reast added that the news came “as if by magic”.

The conclusion of Sue Gray’s investigation into lockdown rule breaking at Number 10 is expected this week.

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