CHANCELLOR Rishi Sunak is expected to cave into pressure and impose a windfall tax on the soaring profits of oil and gas companies. 

This will form part of a relief package for households across the country struggling with rising bills as a result of the cost of living crisis. 

Labour have said the Chancellor has been "dragged kicking and screaming" into backing its call for a levy on fossil fuel companies who have benefited from high global prices.

What is windfall tax?

A windfall tax is a one-off tax which is imposed by a government on a company or a specific group of comapnies. 

It's being introduced because companies who get oil and gas from the ground are profitting from it more than they were last year. 

This is partly due to supply issues created by Russia's invasion of Ukraine. 

The idea is to target companies who are benefitting from something which they themselves are not responsible for - ie a windfall. 

How much have energy companies been making?

BP’s profits more than doubled to around £4.9bn in the first three months of this year, although this was cancelled out by money written off after the decision to exit its investments in Russian oil firms after the invasion of Ukraine.

Similarly, Shell’s profits almost tripled to £7.3bn – the company’s largest quarterly profit on record.

Like BP, they said they had felt the impact of the Ukraine War and that pulling out of Russian investments has cost them £3.1bn.

East Kilbride Connect: Chancellor Rishi Sunak is expected to announce a windfall tax in his upcoming statement.Chancellor Rishi Sunak is expected to announce a windfall tax in his upcoming statement.

What have the politicians been saying?

Introducing a windfall tax would be a U-turn for the Conservative government.

The Prime Minister has previously said that it would put off investors: “I don’t like them. I don’t think they are the right way forward. I want those companies to make big, big investments.”

The SNP have been amongst the parties who have backed the measure.

Chancellor Rishi Sunak has previously said he is not “naturally attracted” to the policy, but that he is “pragmatic” about introducing it.

What has the response been like from energy companies?

The energy industry has warned that introducing a windfall tax “will bring about job losses.”

Chief executive of Offshore Energies UK Deirde Michie said: “This will directly impact manufacturing in this country.

“It will undermine our supply chain, and it will bring about job losses.

“This isn’t feeling good, to have this unexpected surprise on a sector that has been committed to working positively with the government on the security of energy supply and on the energy transition.”

She also shared the Prime Minister’s concerns regarding the potential lack of investment a windfall tax might cause.