Rishi Sunak says he is 'pragmatic' about windfall tax on oil and ...

The government has U-turned on its opposition to a windfall tax on oil and gas firms, announcing it will introduce a levy to help tackle rising bills.

Speaking in the commons today, chancellor Rishi Sunak said the new tax would raise £5bn over the course of the next year, allowing the government to "help families with the cost of living", while avoiding "having to increase our debt burden further".

Except he didn't call it a windfall tax. Instead, he said:

"Like previous governments, including Conservative ones, we will introduce a temporary targeted energy profits levy, but we have built into the new levy ... a new investment allowance similar to the super-deduction that means companies will have a new and significant incentive to reinvest their profits.

"The new levy will be charged on profits of oil and gas companies at a rate of 25 per cent.

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"It will be temporary and when oil and gas prices return to historically more normal levels the levy will be phased out."

Labour MPs jeered loudly and Dame Eleanor Laing, the deputy Speaker, asked for “quieter banter” as they laughed at the way he described the windfall tax they had been calling for, for months.

Indeed, the Liberal Democrats first put forward the idea of a windfall tax on the profits of oil and gas companies in November and Labour outlined its own version in January.

But the Tories and Boris Johnson said it would "deter" investment.

Shadow chancellor Rachel Reeves said the government had been "dragged kicking and screaming" to its new policy position.

She added: "The chancellor has finally come to his senses, U-turned, and adopted Labour's plan for a windfall tax on oil and gas producer profits to lower bills."

But she claimed the government "still have no long term plan to grow our economy and pull us out of the mess they've got us into".

Ed Miliband said:

We wonder what made them change their minds...

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