North Sea windfall tax and Jeremy Hunt’s damp squib Budget

This does not make a lot of sense since it robs the Chancellor of any element of surprise, far less mystique. It is an even worse tactic when there is no unadvertised rabbit to pull from the hat, as proved to be the case this time.

Famously, the post-war Labour chancellor, Hugh Dalton, resigned for revealing secrets, though only as he walked into the Chamber to deliver his Budget. In passing, he told a friendly lobby journalist: “No more on tobacco; a penny on beer, something on dogs and pools but not on horses … profits tax doubled”.

Clement Attlee (Image: free)

This information was published 20 minutes before he spoke. When told what happened, Clement Attlee responded: “Talk to the press? Why would he want to talk to the press?”. Dalton’s offer of resignation was accepted and Attlee observed: “Perfect ass. He always liked to have a secret to confide to somebody”.

For decades thereafter, leaking Budget secrets was the political equivalent of a capital offence. Now there are too many asses hanging around politics, eager to prove their importance by talking to the press, and Budgets are reduced to government PR exercises, quickly forgotten.

The biggest asses in advance of this one were the Scottish Tories. If you’re going to bet the house on a high principle, it’s probably better to check in advance that it will be delivered. Even reading the newspapers, apart from the Press and Journal, would have been a useful precaution since it wasn’t exactly a secret that Mr Hunt was planning to extend the windfall tax on oil and gas to 2029.

The Tories have a plausible story to tell on North Sea oil and gas since they are the only party which is gung-ho for further developments and investment incentives. Whatever one thinks of that policy, it sets them apart. Taxation is a more nuanced issue which they should have approached with caution, at least until they knew what the Treasury was thinking.

It was a bit ironic to hear a Tory chancellor on Radio Scotland, patiently explaining why the Scottish Tories had chosen the wrong fight, even from their own perspective. From Mr Hunt’s, the requirement for £1.5 billion proved more persuasive than the embarrassment of his Scottish comrades.

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For their part, the SNP supported a windfall tax last year but oppose extending it this year. Trying to judge which way the political wind blows in Aberdeen is not a sound basis for fiscal policy. I suspect most voters, whether in Peterhead of Peterborough, look at their energy bills and reckon vastly profitable companies paying a bit more tax sounds fair enough.

Investment in the North Sea transition to low carbon technologies will not depend on the duration of a windfall tax on Ukraine-generated excess profits, however much the industry claims otherwise. This is a passing spat, of which there have been many, and Mr Hunt felt confident enough to call that bluff.

The glaring need is for a long-term strategic plan involving both public and private sectors, to secure North Sea transition; a truly massive undertaking. Indeed, the more the industry threatens not to invest in it unless its lobbying prevails in exceptional short-term circumstances, the more obvious the need for government to safeguard the national interest against that risk. Maybe everyone should lower the rhetoric and focus on that bigger picture. “Traitor-talk” achieves nothing.

The conventional wisdom about Budgets is that they sound better on the day of delivery before unravelling under closer inspection. That does not bode well for Mr Hunt’s because it did not sound great even on the day. For most households, gains from the National Insurance cut will be cancelled out by tax thresholds and other impositions. Not many will have woken up after the Budget with a glow of appreciation.

Too much damage has been done over too long a period and the firmly embedded public view is that any amelioration which arrives before polling day is merely undoing a fraction of what the Tories, over 14 years, have themselves been responsible for. They are the people who brought us Johnson and Truss, with Sunak and Hunt part and parcel of these follies.

Sir Keir Starmer is odds-on favourite to be the next PM (Image: free)

If and when a Labour government takes over, there is going to be no sudden splurge of money and much will depend on how it is spent, rather than spending more. In that respect, there was one passage of Mr Hunt’s Budget that I thought well worth borrowing for future reference. “Today”, he declared grandly, “we launch our Public Sector Productivity Plan”.

He quoted an “excellent speech by the head of the National Audit Office” about how to make “tens of billions of savings” while “the Office for Budget Responsibility says that a five per cent increase in public sector productivity would be the equivalent of about £20 billion in extra funding”.

The obvious question is why these bolts of enlightenment did not strike Mr Hunt or his predecessors before this week. More importantly, Labour should be consulting the same sources and must come into government with an iron will – as happened in 1997 – not to spend more money, which will be in even shorter supply, but to spend it a great deal better. By all means, let’s have a Public Sector Productivity Plan. Indeed, let’s also have one of these in Edinburgh.

Maybe Labour could learn another lesson from Mr Hunt’s damp squib Budget. Only asses give it all away in advance so rein in the spin-doctors who live by sharing secrets. Instead, this time next year, make it the unspun blockbuster Budget for change which the country will be waiting for!

Brian Wilson is a former Labour energy minister