Windfall taxes, and why windfarm owners should start worrying

Windfall taxes are back in the news. The only surprise is that it took this long. After all, governments in financial trouble have only two real choices: they can dramatically cut public spending; or they can have a good look to see who has cash and they can help themselves to it.

I’ve said here several times that it makes sense to be cautious when investing in ‘defensive’ companies for the simple reason that the thing that makes them attractive to you – cash and cashflow – makes them attractive to the government. That was a point nicely proven by Sir John Major’s call for a windfall tax on utility company profits this week.

Downing Street called the ex-PM’s comments “interesting”. You can also bet they’ll be keeping a close eye on the reaction to the idea.

But the utility companies aren’t the only ones who should be shifting around nervously. Landowners in Scotland who are rolling around in wind turbine cash might want to start worrying too. Why? Because the redistribution of wealth from the rest of us to them via energy company bills really irritates a lot of people.

At the same time, a largish percentage of Scottish nationalists are firm believers in developing a high-tax, big-state nation (despite the fact that to an outsider’s eye they already appear to live in one).  So much so, that they demanded a debate on whether all on- and offshore renewable schemes should be legally obliged to hand a 51% shareholding to the state.

That might be a little extreme even for the SNP, but nonetheless the Scottish government review of land ownership has made it pretty clear that they will be looking for ways to “redistribute the cash wealthy lairds make from wind farms* to benefit the less-advantaged”. Hello windfall tax.

This is all a bit circular, of course (taxing subsidies…). But that’s modern policy for you.

*This is serious cash by the way. I’ve written on it here before, but the Mail on Sunday also enjoys a good rant on the issue. Their latest suggests that the Earl of Glasgow is set to make over £5m from his turbines, while the Earl of Moray will be getting over £7m. Nice work, etc.


  • Carduelis

    There have been more than 2,600 wind farm applications in Scotland over the past 18 months and the SNP has continued to approve wind farms that have not yet received licences from the industry regulator, itself declared illegal. I wonder why the SNP is so keen to build up the sector?
    Is it, perhaps, that they expect taxpayers and consumers south of the border to continue to pay the wind farm subsidies post independence?

  • chapter24

    Because it’s the cheapest way to generate electricity that does not release carbon pollution.

    In future new nuclear designs may end up cheaper, but as the SNP has set its face against nuclear onshore wind is currently the best option.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12