Tory windfall tax row widens as two more Cabinet ministers reject the policy

Cabinet ministers have lined up to warn Rishi Sunak off plans for a windfall tax on energy firms, insisting the move would damage the economy and have unintended consequences.

In a highly unusual display of public dissent, Brandon Lewis, the Northern Ireland Secretary, and Sajid Javid, the Health Secretary, became the fifth and sixth Cabinet members to speak out against the policy in the space of a week.

The Chancellor has refused to rule out the idea of a one-off windfall tax on North Sea giants, which is being pushed by Labour and has support from some Tory backbenchers - although others fear it would be unconservative. Mr Sunak is attracted to the idea of a windfall tax that would offer firms different rates based on how much money they are prepared to invest in new energy infrastructure in Britain, The Sunday Times reported late on Saturday.

Kwasi Kwarteng, the Business Secretary, last week described a windfall tax as “taxing investment in jobs”, while Liz Truss, Suella Braverman and Jacob Rees-Mogg were also critical of the idea.

In an interview with The Telegraph, Mr Lewis said it “doesn’t really work” as a means of tackling the cost-of-living crisis.

“It puts off investment both in that sector and, absolutely, the risk in others,” he said. “So we'd be very, very wary of a windfall tax. What we want to see is companies using the money they've got to invest, particularly in that industry.”

The Northern Ireland Secretary insisted the Government could not rule anything out if investments did not take place, but stressed ministers were “all very right to be wary of windfall taxes”.

“I'm a Conservative, I believe in a low tax economy. We want to see as much money in people's pockets as we possibly can and businesses investing in high productivity and high skilled high paid jobs.”

And accusing Labour of prioritising “ a few headlines” over supporting business, he warned: “Dropping those kinds of things out there can scare off investment. That is damaging to the UK economy.”

At the Welsh Conservative conference on Saturday, Mr Javid said: “You just mentioned the windfall tax idea. Instinctively I don’t like it. I just think we've got to be really careful.

“As a country, we have a very hard won but strong reputation on being pro-business, welcoming investment.

“Businesses like certainty and of course there's no such thing as pure certainty, but when it comes to taxes, I think we've just got to be really careful with these sudden taxes that could have an impact in the long term that we would come to regret.”

Sam Rowlands, the Tory Senedd member who was interviewing Mr Javid on stage, responded: “I think those points will certainly be welcome in this room among Welsh Conservatives, so thank you for making those.”

Voter research conducted in Whitehall found a windfall tax was popular among the public, with as many as eight in 10 backing the tax raid on energy companies, which have enjoyed unexpectedly high profits after prices soared in recent months.

Boris Johnson said in a recent radio interview that a windfall tax was not the right way forward and he would instead prefer to see increased investment from oil firms in new energy sources.

Lord Lamont, the former Tory Chancellor, told the Telegraph he was “not very favourably inclined” towards a windfall tax.

“Conservative governments have introduced them before but I think they introduce an element of uncertainty,” he said. “I believe the tax regime should be the same for good times and bad. You don’t alter the tax for a company according to the weather.”

But Lord Heseltine, a former trade secretary, said: “I’m on the side of those who think that the country’s economy is in a serious state, and the need for action to deal with inflation is paramount.

“This is all a part of a tough approach, which reflects the parlous state of the national economy. There are no easy decisions. You either take pain now or pain later.”

Sir Bernard Jenkin, a senior Conservative backbencher, called for tax cuts to compensate for “massive demands” on the economy and suggested tighter monetary policy may be needed.