Ministers are to meet energy company executives on Thursday to discuss measures to tackle the rising cost of living as the UK government considers beefing up a windfall tax on their profits.
The chancellor, Nadhim Zahawi, and the business secretary, Kwasi Kwarteng, will meet gas and electricity bosses as the Treasury considers toughening the 25% levy on the profits of North Sea oil and gas operators announced in May.
However, the government admitted the meeting was only part of a “short-term response” and any policy decisions were unlikely to be made before a new prime minister is announced next month.
Before Zahawi’s predecessor, Rishi Sunak, announced the tax in May, ministers were split on whether to introduce it, with Kwarteng among those to oppose it.
Sunak, one of the two contenders to be the Conservative party leader and prime minister, hoped to raise £5bn from the levy, which includes significant investment allowances.
Oil and gas companies have enjoyed huge profits since the energy crisis began last summer, which has been exacerbated by the war in Ukraine, which has further pushed up wholesale energy prices.
Since the tax was announced, oil and gas companies have announced even larger profits than previously anticipated. Unions labelled the bumper earnings an “insult to millions” as the cost of living hits households, who are facing bills of more than £4,000 next year.
A Treasury source told the Sun, which first reported news of the meeting: “If you look back at what these firms were projected to make and what they actually brought in, it was beyond their wildest expectations. We are looking at options to go further and faster on those profits.”
The government has also floated the idea of extending the tax to electricity generators, although Boris Johnson later rejected the proposal.
The education secretary, James Cleverly, said Thursday’s meeting would involve the chancellor and business secretary “calling in” the leaders of the big energy companies to “knock some heads together” and “hold them to account about what they’re going to do with those profits”.
He said the meeting was “part of the short-term response” and that no “very big policy-changing decisions” would happen before Johnson exits Downing Street in September.
Cleverly told Good Morning Britain on Wednesday: “The increase in energy costs has been driven by the war in Ukraine and a global crunch; this is affecting everyone pretty much across the world. Everyone in the developing world is seeing those energy bills go up.
“What we need to do is make sure that we have a short, medium and long-term plan, so the chancellor and the business secretary are getting those energy companies in as part of the short-term response.”