BUSINESS leaders have warned that the plans announced by Rishi Sunak to impose a windfall tax on oil and gas firms will deter investment and could affect jobs.

Mr Sunak said the 25% tax on profits would be used to give the poorest households up to £1200 extra to tackle the cost of living.

It comes after months of refusal to implement such a tax by the Treasury, despite calls for one by opposition parties.

Dr Liz Cameron CBE, the Chief Executive of the Scottish Chambers of Commerce, said the plans for taxes were "extremely disheartening".

She said: "Scotland’s businesses warned about the damaging impact that any sort of additional windfall tax on energy companies would have on the economy and our ability to secure a successful energy transition that protects jobs and communities.

"It is extremely disheartening that the UK Government have chosen to introduce this additional levy which will inevitably deter investment and make Scotland and the UK a less attractive market internationally, adding to the pressures facing the business community. " 

Ryan Crighton, Policy Director at Aberdeen and Grampian Chamber of Commerce, said the plans would not encourage firms to invest in the energy transition or the North Sea and would achieve "very little".

He said: "Where the industry, the Chancellor and Prime Minister agree is that a windfall tax will deter investment in both the North Sea and our energy transition. All three have been repeating that mantra for months now.

"In the short-term, taking an additional £5billion from a sector already taxed at 40% will achieve very little apart from making the North Sea – already one of the world’s most mature basins – less attractive to investors.

"Tax and fiscal stability, above all else, are what really matter in a globally competitive investment market, and today we’ve shot ourselves in the foot."

However others have been more welcoming about the measures, saying they are essential to help people pay their bills.

Justina Miltienyte, head of policy at the comparison website Uswitch.com said the plans "will go some way towards  helping customers weather the storm."

She added: "The substantial action suggests that the Government finally appreciates the unprecedented scale of the help needed, following Ofgem’s prediction that the number of households in fuel poverty could double to 12 million.

“Doubling the bill rebate to £400 is a sensible step, and it is good news that it will not have to be repaid. This measure will give some welcome relief to customers and reduce the impact of soaring bills, especially for those on the brink of financial hardship.

“We have long called for an increase in support for the vulnerable who will be worst hit by the energy price hikes. So the one-off £650 payment to the eight million people with the lowest incomes is to be applauded, as is the £300 for pensioners and £150 for those receiving disability support. 

“The devil is in the details though and we still don’t know how the payments will be distributed. We will be watching to see how the Government implements these proposals and ensures help actually reaches all those that need it.”

Martin Lewis, the money-saving expert said he thought it was "quite a good package and it's probably better than I expected it to be".

He said he had spoken to Mr Sunak on Monday and he appears to have implemented several of the measures he suggested. 

Mr Lewis said "I am breathing a sigh of relief because this will relieve some of the pressure.

"This looks to be a relatively generous package from a Conservative government and I think they have listened.

"I would have liked to see this earlier, but better late than never.

"Some people are saying 'Well you've only done it because of Sue Gray'.

"In the conversations I had been having the likely announcements were due to come in July, so it's not a case of the Sue gray report has delayed this - if anything the report has brought this earlier."