CHANCELLOR Rishi Sunak has suggested he could back a windfall tax on oil and gas companies, despite Boris Johnson saying it would “clobber” businesses. 

Speaking to Mumsnet, the chancellor hinted at a possible U-turn if firms didn’t invest in future development. 

He said: “What I would say is that if we don’t see that type of investment coming forward and companies are not going to make those investments in our country and energy security, then of course that’s something I would look at and nothing is ever off the table in these things.”

Just hours before, when Labour leader Sir Keir Starmer had asked Boris Johnson about taxing oil and gas firms, the Prime Minister responded by saying it would “clobber the very businesses that we need to invest in energy to bring the prices down for people across this country.”

Treasury sources later told The Telegraph that Mr Sunak's comments were intended as a "warning shot" to oil and gas firms to start investing significant sums in the UK "soon".

Energy companies have seen profits surge at a time of record oil and gas prices. 

Next week, BP and Shell are expected to announce combined profits for the first quarter of this year of more than £10 billion.

Shell has already announced £25 billion worth of investment and BP are expected to make similar commitments.

Mr Sunak’s colleagues in the North East have described the tax as “dangerous” and “industry-wrecking” and have warned that "pushing the industry off a cliff" will end "tens of thousands" of local jobs at once across their constituencies.

Speaking in the Commons in February, during a Labour debate on the levy, Banff and Buchan MP David Duguid said the one-off charge on oil and gas companies would “significantly undermine the sector’s ability to sustain its investment in the oil and gas industry, make us more dependent on foreign imports of hydrocarbons—which are not just used for fuel, by the way; they are also used for manufactured products such as recycled plastics, detergents, and even medicines and personal protective equipment—and put security of supply, as well as thousands of jobs, at risk.”

He added: “The main factor against this windfall tax—alongside the uncertainty that it would bring to the industry, its investors and the workers whose families have the very same cost of living worries that have been discussed in this debate—is the restrictions that it would place on the oil and gas industry’s vital contribution to driving forward the energy transition to net zero.”

However, there is broad support for the plan from other parties. Nicola Sturgeon has said she is "not ideologically opposed" to the tax but has warned that the "brunt" of any government response to the cost of living crisis must not fall on the north-east.

Scottish Greens energy and climate spokesperson Mark Ruskell welcomed the Chancellor’s willingness to look again at “taxing the obscene profits of oil and gas giants” to “quickly address the urgent and crippling cost of living crisis faced by households with eye-watering rises in their energy bills.” 

He said: “The tax contribution these firms are complaining about is a drop in the North Sea cash cow, and they should be expected to contribute more.

“I welcome the fact that the case for a windfall tax has finally reached the Treasury in-tray, and I hope the UK Government will also recognise that to achieve energy security and address the cost of living and climate crises we need to reduce our reliance on fossil fuels with their volatile prices and invest in clean renewable energy, creating long term jobs for the future.”

During the interview, Mr Sunak hinted there could be further help for families struggling with soaring energy bills in the autumn.

He said: “We’ll see what happens with the price cap in the autumn, I know people are anxious about this and wondering if they’re going to go up even more,” he said.

“Depending on what happens to bills then, of course, if we need to act and provide support for people we will, I’ve always said that. But it would be silly to do that now.”

Asked about measures to support families through the cost-of-living crisis, Mr Sunak said: “I know things are tough right now, of course they are.”

He pointed to the raising of the national insurance contribution threshold, 5p cut to fuel duty and a £9 billion package to help people with energy bills.

However, “there’s a limit to how much we should be borrowing as a country”, he said, adding that more borrowing could drive up interest rates.

“Not borrowing huge amounts and just passing that tab onto our kids is the right thing to do.”

Quizzed about how someone in his financial position can empathise with people struggling to make ends meet, Mr Sunak, whose wife is the daughter of an Indian billionaire, harked back to his grandparents who emigrated to the UK “with very little”.

“Of course now I’m in a fortunate position but I didn’t start like that, that’s not how my family started.”

He said he is “trying to help people manage through some of the challenges we’re seeing with rising prices and I’ll never forget where I came from and the values that I was raised with”.

Asked if he believed the Prime Minister was behind the revelation of his wife’s non-domiciled status, which exempted her from paying tax in the UK on foreign earnings, Mr Sunak answered: “I don’t.”

Labour's shadow treasury minister Tulip Siddiq said Mr Sunak’s claim that it would be “silly” to act now showed he did not understand the pressures families were under.

“How out of touch is this Chancellor?” she said

“Families are already feeling the cost-of-living crisis, hit by record rises in energy prices, record high petrol prices and staggeringly steep hikes in the cost of food and essentials.

“With the Chancellor heaping them with the biggest tax burden in 70 years on top of that, people are paying more and getting less. It’s time to act.”