Autumn Statement slaps taxes on EVs, fossil fuels and more

The chancellor Jeremy Hunt has increased the windfall tax on oil and gas giants from 25 to 35 per cent and given it a two-year extension, so that it will now run until March 2028.

A 45 per cent levy on low-carbon electricity generators has also been announced, which is estimated will raise £14bn next year.

While not reliant on generating energy from fossil fuels, low-carbon facilities such as nuclear power plants, windfarms, solar farms, hydro projects and biomass burners have nevertheless enjoyed bumper profits this year, with high wholesale gas prices pushing up the price of electricity generated from any source.

The announcement saw shares in SSE, which runs gas-fired power stations alongside hydroelectric plants and windfarms, drop by 3.75 per cent just one day after it reported a tripling of profits this quarter.

Centrica shares also dropped by 1.1 per cent, while Drax – which runs a large biomass power station in North Yorkshire – are down 3.9 per cent.

Hunt also announced an extra £6bn of investment in energy efficiency from 2025 to help meet a new ambition of reducing energy consumption from buildings and industry by 15 per cent by 2030.

This could save £28bn (at today’s prices) from the national energy bill or £450 off the average household bill, Hunt said.

Other changes include a removal of the exemption for electric vehicles from Vehicle Excise Duty from April 2025 which is designed to make the motoring tax system “fairer”.

In February, MPs on the Transport Committee warned that the government faces a major funding gap for road infrastructure if it does not develop a new motor tax for zero-emission vehicles.

With sales of second-hand electric cars soaring this year, the UK’s car market is expected to become increasingly less lucrative for the taxman as the technology reaches maturity.

While Hunt initially scrapped the mini-budget’s £2,500 cap on household energy prices when he assumed his new role last month, he has extended the energy price guarantee for an additional 12 months from April at a higher £3,000 cap.

There will also be further payments for help with energy bills for pensioners, for poorer households and for disabled people.

The Chancellor also doubled down on climate pledges and said the government remained committed to proceed with the new nuclear plant at Sizewell C despite rumours that the project was going to be delayed or axed as part of spending cuts.

“We remain fully committed to the historic Glasgow Climate Pact agreed at COP26 including a 68 per cent reduction in our emissions by 2030,” Hunt said.

The building of new infrastructure such as roads, train lines and communities will be also be safeguarded with over £600bn in capital investment over the next five years.

While there were no new funding announcements for digital infrastructure projects, current funding levels are expected to be maintained.