British businesses warn Labour leader Keir Starmer

The Confederation of British Industry has warned against Labour‘s plan to increase the windfall tax on North Sea oil and gas firms.

The interest group, which represents 190,000 businesses, claims such a move could hurt investor confidence in Britain.

It said in a ‘business manifesto’ that the next government must commit in its first post-election Budget to ‘no further sector-specific taxes – windfall or otherwise’.

Mohammad Jamei, the CBI’s director of economic policy, said it wanted to revitalise ‘brand Britain’ as an investment destination.

‘We believe that this would do the opposite of that,’ he said.

The government imposed a 35 per cent levy on UK oil and gas producer profits in 2022 after a jump in energy prices, which means they face an overall tax bill of 75 per cent – a policy that the industry is already killing off investment and jobs.

Labour wants to increase that to 78 per cent.

Mr Jamei said: ‘Any sector-specific taxes will have an impact on investor sentiment which is already in a place where it’s quite challenging.’

Windfall taxes can have a broader impact on investor sentiment regarding Britain, not only for the sector involved, he said.

‘For example in financial services, they believe ‘If it impacts this sector over here what’s to stop the government then bringing in other sector-specific taxes for us’.

‘That’s the real concern that we have, that’s the real risk.’

The CBI is also calling on the next government to monitor corporation tax compared with other countries to ensure the rate – and tax breaks offered to offset it – is internationally competitive.

Last year it was increased from 19 per cent to 25 per cent though the government has also brought in measures to reduce the tax bill for companies making certain investments.

‘We are consistently being told that the chopping and changing of the tax system can have a big impact on investment decisions made,’ Mr Jamei said.

‘There are multinationals where they are vying for international capital from their headquarters based outside of the UK.

‘Tax might not be the thing that determines where businesses invest but it can make or break a case if it’s not predictable in the UK.’