FirstFT: Catch a raid on electricity generators with a new tax

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Jeremy Hunt is preparing to raid generators with a new “excess revenue” tax as he tries to find money to pay for inflation-related increases in benefits and pensions while helping families with energy bills.

The chancellor will also use Thursday’s autumn statement to raise the current surprise tax on oil and gas companies – known as the “energy dividend tax” – from 25 percent to 35 percent, with a further two-year extension until 2028.

The government was considering setting a “revenue cap” on generators in line with a similar move by the European Union.

Now Hunt is setting up a 40 percent tax on “excess returns” from the sector above a certain rate per megawatt-hour, according to people close to the discussions. This threshold has not yet been determined.

The two surprise taxes are expected to generate more than £45 billion over six years, although the final figure will depend on energy prices.


Do you agree with Hunt’s new windfall tax on generators? Let me know at firstft@ft.com. Here’s what other readers have to say about whether Thursday’s fall statement will ease the cost of living:

My pension statement yesterday for retirement in 2024 showed significant losses. It hurts, but we have to deal with a little more” – Chris Keats Lewis from Ashtide, UK

“More taxes on people earning less than almost a million pounds and tightening the belt on public service will lead to worse recession, less spending and less growth” – Ben Copley in Portsmouth, UK

“Living as I do in a country with annual inflation over 84 percent, a salary in Turkish lira, with a family to support, I find it somewhat funny to see people in the UK complaining about 10 percent” – Julian Bennett in Ankara, Turkey

1. HMRC sues EY over alleged misrepresentations The UK Tax Agency is suing the accounting firm Big Four over false allegations made while negotiating a tax settlement involving British real estate investor and donor conservative Jimmy Ritblatt.

2. CIA Director Warns Russia Against Using Nuclear Weapons “Bill Burns conveyed a message about the consequences” of using nuclear weapons, the White House said yesterday, in the first known in-person meeting between senior US and Russian officials since Vladimir Putin’s invasion of Ukraine.

3. Amazon is cutting 10,000 jobs The e-commerce giant plans to cut about 3 percent of its corporate workforce in a bid to cut back losses or poor performance in its business, a person familiar with its plans said. The news came on the same day that former CEO Jeff Bezos pledged to give away most of his $124 billion fortune.

4. FTX bankruptcy case stopped Sam Bankman-Fried’s cryptocurrency exchange has not filed for so-called Day One cases to formally begin bankruptcy proceedings as of yesterday, according to court records, reflecting the chaos within FTX after it sought US court protection from creditors last week.

5. The world population is 8 billion people The world population today is 8 billion and will reach 9 billion in 15 years as it witnesses an unprecedented rise in the number of retirees, according to the latest United Nations data. It also showed that the global average life expectancy has risen by about eight years to 30 since 1950 and is set to rise to 36 by 2050.

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next day

G20 Summit 17 of the world’s largest economy leaders are expected to attend the meeting in person, united by concerns about hyperinflation, geopolitical instability and energy shortages. Although Vladimir Putin has decided not to join the meeting, which begins in Bali today, the Russian president will dominate discussions about his war in Ukraine.

The Belgian court rules the GFG A court in the city of Liege will decide whether to take control of two steel mills held by Sanjiv Gupta’s GFG Alliance and put them up for sale at the request of a court-appointed controller.

Economic Indicators Unemployment data for September is set to show that the UK remains below pre-pandemic levels. A “winter of discontent” looms as a group of workers, most recently nurses, demand wage increases in line with inflation. EU GDP estimates for the third quarter are also expected to point to a contraction before winter.

corporate profits Vodafone publishes preliminary results. Shareholders will look at how much British Telecom was able to cut after announcing the sale of its stake in Vantage last week. Other companies slated to report include Imperial Brands and Infineon Technologies. View the full list here.

Report of the US-China Economic and Security Review Committee The US Congressional Committee will release its annual report, which will likely be more hawkish on dismissal than it has been in the past, writes Rana Forouhar.

Donald Trump ad The former US president made a “very important announcement” that was scheduled for today at his Florida manor, Mar-a-Lago. Trump is expected to announce his intention to run for president in 2024, but the lackluster performance by the candidates he supported in the midterm elections is a setback for his ambitions.

What else are we reading and watching

Cracks in the US Treasury Bond Market As a recession looms and most asset prices face a dramatic sell-off, the world’s most important debt market is creaking again. With the crash in UK bonds exposing weakness in bond markets, can the US survive the sell-off?

The global housing market is heading into a brutal recession At the end of 2021, things looked rosy for the global housing sector. It can be said that there has never been a better time to own a home. Not even a year later, the sector is now preparing for the widest downturn since the financial crash.

As the eyes of the world turn to COP27, Egypt is battling the problem of climate change The host country of this year’s United Nations conference is “extremely vulnerable” to global warming, according to reports cited by the World Bank, as farmers struggle to make ends meet in the unpredictable weather that has now become the “new normal”.

Britain’s fight over medicines UK price-infuriating drugs are nothing new, especially from US companies accustomed to ineffective giveaways for their own regime. But the sector may have a point about a new deal to reduce the size of the NHS drug bill, writes Helen Thomas.

Qatar’s legacy in the World Cup In our latest FT movie, we take a look at what the FIFA World Cup will mean for the country, what will happen to the stadium infrastructure and the FIFA tournament next. For more information about the sports field, Premium subscribers can Subscribe to the Scoreboard Newsletter.

Video: Qatar’s legacy in the World Cup | FT . scoreboard

wine

Ridge Vineyards, a Silicon Valley winery founded in their spare time by four Stanford scholars, is celebrating its 70th anniversary this year, and FT wine critic Jancis Robinson was invited to sample some of its vintage bottles as part of the festivities.

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