This is the article the Telegraph asked me for on Friday:

I was happy to vote in support of the government opposing Labour’s windfall tax plans when they put them to Parliament. Ministers were right to say then that windfall taxes make the UK a less attractive place for business to invest. They introduce a more  unpredictable element into planning a long term business investment.

            It is particularly strange to single out the production of oil and gas from domestic sources for such a tax. After all surely the government  want to cut carbon dioxide output which we do by collecting and using our gas instead of importing foreign gas  in LNG tankers from abroad. LNG imports means twice as  much carbon dioxide for each unit burned.  We already tax producing energy at home at double the rate of other business activities  so it has an inbuilt windfall tax for the government. That should be another reason why we want to maximise home production and cut out imports. Why pay all that production tax away to Russia or Qatar when we could have it to pay for the NHS? If we produce more energy here we also have more better paid jobs, a further source of extra ` tax revenue as the Treasury taxes the salaries and then taxes the spending of those who earn the money. The government should actively be speeding and licencing more North Sea output and new fields to replace imports for green reasons, to raise more revenue and create more good jobs.

           There is a wider point of political importance. Conservatives believe that free enterprise and the market place are the right answer for the supply of many of our needs from bread and water to energy and clothes. The private sector innovates, offers great customer service, gets rid of unsuccessful or poor quality ventures and finances itself without recourse to tax revenue. In 2020 the large oil companies lost huge sums as demand for their products collapsed with lockdown. None of us thought the taxpayer should subsidise them. Shareholders took the hit. Two years later those same oil companies are making high profits on oil and gas production in the UK which will smooth the shareholder returns a bit after the bad year. The Treasury will take 40% of those profits. Those same companies like BP that also had big interests in Russia have just lost far more on their Russian write offs than they are making on the North Sea output. BP’s first quarter figures were a huge reported loss overall. It’s a reminder of what a risky business it is.

            I urged the Chancellor to have a second package of measures this spring. I am glad he came to the view that he had not done enough to offset the recessionary forces unleashed by such a large hit to real incomes. I urged him to give back the extra tax revenue he is collecting on oil, gas and electricity. His Vat receipts on energy bills will rise 50%, his taxes at the petrol and diesel pumps are well up, and his North Sea oil corporate tax is surging. This windfall tax rise should be given back to help people afford the dearer food and energy. I also urged him to give it back by a combination of increased Universal credit to help those hardest hit, and to offer some tax cuts. If he had cut the taxes we pay on domestic energy and at the pumps his measures would have nudged inflation down a bit. The higher inflation goes, the bigger the future costs to the government as they index payments to the new rate. Instead he chose to give it back through one off payments which will not reduce the cost of living at all.  

           The  more of the money he claws back in extra tax payments elsewhere the less impact the givebacks will have on helping growth and avoiding too sharp a slowdown. The Bank of England expected the economy to stall next year before the measures based on the impact of the income squeeze and their own monetary tightening  with dearer mortgages. The Chancellor needs to bear down on inflation more whilst at the same time assisting growth. Growth means  revenue grows faster and the deficit comes down. Past governments that have caused or allowed recessions have had ballooning deficits as revenue falls and public spending rises in a slump. There needs to be a big investment led boost to the economy as we need more capacity of many kinds – more home produced energy, more home growth food, more home landed fish, more home manufactured technology. This requires low corporate taxes, a stable approach to  taxing profits, and government regulatory, procurement  and licensing policies which assist capacity building at home. Putting in better first year allowances for making an investment does not offset the damage of higher rates of tax on all the years the investment is working, and does not compensate for the threat of windfall taxes if you are successful. The Chancellor should live his brand as the low tax enthusiast.

I agree with the Chancellor when he says we need to boost investment to boost productivity. I would add we need to increase capacity in many areas to curb inflation and improve the balance of payments.

Which brings me to my disagreements with the Chancellor. His high tax and  new taxes policy makes the U.K. a less desirable place to invest. His stupid proposal to increase corporation tax substantially will deter investment. Windfall taxes also put people off. Why invest if you could face a supertax should your investment  suddenly do well?

The Chancellor thinks if you  give businesses a good allowance for the  initial costs of the investment that will overcome higher and variable rates of tax once the investment is up and running. Instead the investor is likely to do a long term cash flow and DCF calculations which will demonstrate that the big increase in tax on the profits of the venture will overwhelm the tax cut on the original cost.

The Chancellor needs to overcome negative Treasury orthodoxy and explain to them that lower tax rates produce more investment and more growth which in turn yields more revenue. He also needs to mend the mess he is making of oil and gas investment. We need to open up new gas and oil fields now. When will Cambo, Jackdaw and the  others get the go ahead? How much more tax will he burden them with?

Recently I looked at the overall collapse of UK car making in Britain. Today I want to look at an iconic UK car brand which has experienced falling volumes for a while. Jaguar cars have been in retreat for some years. This April they saw sales 44% below a year earlier with just a 0.94% market share.  The brand still has a loyal fan base that like the history and traditions of the cars, with many owning older vehicles as reminders of past glories. It also has a growing list of former fans who will not buy a modern product, failing to see in some of the designs much  of the “Grace, pace, space” of the E type or of the Mark 2 saloon or the XJ, XK or S type of later years.

Jaguar’s sales and marketing strategy is partly to blame. Their dealers had a penchant for selling down, trying to persuade XJ owners to buy an S type, or S type owners to buy an X type, as various sales promotions were doubtless offered. When they replaced the S type with the XF they allowed journalists to write that they were appealing to a new younger audience, turning their backs on the older supporters of the S type who they thought were passe. It proved easier to lose the old supporters than to find the new enthusiasts in sufficient numbers. The XF was a pleasant looking car, but arguably Vauxhall had already done a similar  style well with its Insignia at a lower price than the Jaguar. The XF was  not distinctively Jaguar in the way the thoroughly modern S type was  on original launch with genuflections to the Mark 2. The well supported XJ with its own evolving styling was then changed substantially to look like a fattened version of the XF. The arrival of more Sports Utility vehicles  led Jaguar into competition with its sister brand, Range Rover where many thought Range Rover did it better. The Sports Utility look had little in common with the past glories of the sports, GT and sporting  saloons of the historic ranges.

Now today they scramble to make electric cars without defining what it was about previous ranges of their cars that people liked about Jaguar. Styling and image were an important part of it . When Jaguar cars started to look more like other cars they lost some of their fan base. Briefing against those who used to buy Jaguars was also a bad mistake.

Rt Hon Sir John Redwood MP (Wokingham) (Con): When the Chancellor approved £150 billion of extra cash to be printed in November 2020 and gave a full guarantee against losses on the bonds, did he think that there could be any inflationary and public spending risk from that? I fully support giving back the huge windfall taxes that he is already collecting on energy, the VAT on fuel, the rip-off at the pumps and the much-enhanced profits tax coming from North sea oil and gas. That should be given back because people need some relief. On inflation, though, what did he think when he printed the money?

Rishi Sunak, Chancellor of the Exchequer: I am grateful to my right hon. Friend for his question. He and I have talked about inflation for quite a while. He will know that I have long been concerned about the potential of rising inflation and interest rates. It is something that he and I discussed very early in my time in this job. That is why, from the beginning, I have been careful to protect our public finances against the costs of rising inflation and interest rates. I am glad that we took those decisions. Now, because of that, we are in a position to act and to support people.