Scots' energy bills to be cut in £10bn support package as chancellor Rishi Sunak set to announce windfall tax

Scots are set to receive help to pay bills in the face of soaring prices as chancellor Rishi Sunak is expected to impose a windfall tax on the profits of oil and gas firms.

It follows months of pressure building on the UK Government to do more to help people across the country facing a cost of living crisis.

Sunak is set to cave in to pressure and impose a one-off windfall tax to fund a support package worth around £10bn.

Treasury sources did not deny reports he would use his announcement on Thursday to scrap the requirement to repay the £200 discount on energy bills, and could increase the level of the grant.

The chancellor will outline his plan in the House of Commons following a day dominated by Sue Gray’s partygate report.

On Wednesday, Scotland’s finance secretary Kate Forbes wrote to Sunak urging him to use a “£30bn fiscal headroom” to help those struggling with rising bills.

She said the Scottish Government was taking the action it could within the powers it had.

“With inflation reaching a 40 year high of 9% and forecast to rise higher; Brexit increasing food prices by over 6%; and the news that the energy price cap is set to rise to £2,800 a year in October, it is absolutely imperative that further action is taken to relieve the acute pressures being felt by households and businesses,” Forbes wrote.

Details of the one-off tax to fund cost of living support measures are not known but Labour is set to claim a victory after it campaigned in favour of the policy against opposition from Boris Johnson.

Measures could include a further increase to the warm homes discount to help low-income households cope with rising energy bills, increases in the winter fuel allowance, and a further cut in council tax or a VAT cut.

It comes after Ofgem chief executive Jonathan Brearley’s said he expected the energy price cap to increase by a further £830 to £2,800 in October.

The cap rose by almost £700 in April meaning millions of people across the UK saw their energy bills jump.

Perth-based multinational SSE pledged to invest £24bn in infrastructure across the country as it announced its end-of-year profit report on Wednesday.

However, the energy giant said the investment relied upon a “continued supportive policy environment”.

Sunak has been warned that a windfall tax on energy firms would see higher prices and do long-term damage to the oil and gas industry.

Offshore Energies UK (OEUK), which represents the industry, issued the warning amid speculation the chancellor is set to implement the tax on profits.

Deirdre Michie, chief executive of the body, said: “This is an industry that thinks and plans long-term, so sudden new costs, like this proposed tax, will disrupt planning and investment and, above all, undermine investor confidence.”

Profits of energy companies have been boosted by the surge in oil and gas prices in the wake of Russia’s invasion of Ukraine.

Critics have argued energy firms are benefiting from a spike beyond their control and a year-long, one-off levy on their profits could help pay to support squeezed households.