MPs have voted against a Labour motion to implement a windfall tax on oil and gas producing companies.
Labour had tabled a Queen’s Speech amendement to place the tax on the producers to give “much needed relief” to consumers.
However, the amendment was rejected by the Commons with a majority of 62.
The move has been heavily criticised, with companies recording bumper profits at a time when bills are skyrocketing for the general public.
What is a windfall tax?
A windfall tax is a one-off duty placed on a group of companies by the government.
This policy is often used when companies unexpectedly benefit from a situation out of their control, with profits often inflating well beyond what is expected.
Labour proposed that gas and oil producing companies be subjected to a windfall tax after the cost of gas supplies spiralled following the Covid-19 pandemic and the beginning of the Ukrainian War.
Those companies have seen incredibly healthy profits, with the cost being passed onto consumers who have seen energy bills increase by 54%.
What happened in the vote?
The vote took place on the evening of 17 May.
Despite some vocal Conservative support for the motion prior to the vote from former minister Robert Halfon and Mel Stride, Tory chairman of the Treasury Committee, it was voted down with a majority of 6.
The amendment failed with 310 votes against and 248 votes for.
What has been the reaction to the vote?
There has been harsh words for the Tory MPs which voted against placing the windfall tax on the companies.
TUC general secretary Frances O’Grady said: “Conservative MPs have chosen to side with profiteering oil and gas companies over working people.
“Millions are being walloped by soaring bills and prices – having been left badly exposed to this crisis after more than a decade of standstill wages and cuts to social security, overseen by successive Tory governments.
“All the while the likes of Shell and BP are registering eye-watering profits.”
Former Labour leader and current shadow climate change and net zero secretary Ed Miliband said: “Every Conservative MP who voted against the windfall tax tonight has condemned millions of families to misery and anxiety as they struggle to pay their energy bills.
“Tonight a message has been sent by the Government that they will do everything they can to protect the oil and gas companies, and refuse to act to protect families. It says everything you need to know about where the Tories stand.
“The truth is, they have run out of excuses, and amidst the chaos and confusion about what their position is, I think a massive U-turn is lumbering slowly over the hill.
“But I say this to the Chancellor: swallow your pride and get on with it.”
During the debate before the vote, Chancellor Rishi Sunak said that the policy could only be implemented if oil and gas companies do not invest their profits back into “growth, job and energy security”.
Tory MP Laura Trott argued that the tax would be discouraging competition in the industry, saying: “(Mr Miliband) was absolutely right when he said that BP and Shell have not said that this is a disaster for them, but in many ways they wouldn’t. They are huge players in this market.
“Actually, they can absorb a windfall tax. The problem will be much more with the smaller players, the discouragement to competition that this might result in. And I strongly believe that the best way we can drive down prices in this market is by encouraging competition.”