Is Rishi Sunak facing a Scottish rebellion?

The Chancellor will be anxiously preparing himself this evening for tomorrow’s papers, waiting to see how his Budget lands. He won’t need to wait quite as long to hear how his own party members have received it, however. And the verdict is already in from the Scottish Tories. It isn’t good. Jeremy Hunt’s decision to extend the energy profits levy, which taxes the profits of oil and gas companies, to 2029 has left Scotland’s Tory MPs furious. Never mind bad press, might the Chancellor have inadvertently landed a Tory rebellion in Sunak’s in-tray?

Scottish Tory leader Douglas Ross was the first to hit out by announcing that he will not vote with the government to pass the legislation. Ross said that he has been left ‘deeply disappointed’ by the announcement, that it ‘is a step in the wrong direction’ and how he ‘will continue to urge the Chancellor to reconsider’. Not that he hasn’t done that enough already – it is understood that Ross has had a number of conversations with senior Tory figures in recent days, pleading that he didn’t go ahead with the extension. He told Sky News this evening that he made ‘as strong as possible a case’ for the tax not to be extended, and that the Prime Minister ‘has made the wrong choice’.

It is understood that the Energy Secretary Claire Coutinho was also strongly opposed to the plans, and the government’s energy minister Andrew Bowie has come out in opposition to the move too. There is speculation that Bowie, MP for West Aberdeenshire and Kincardine, may resign his position, after he tweeted this afternoon that ‘the extension of the [levy] is deeply disappointing’ and he was reportedly placed on ‘resignation watch’ yesterday. When Ross was asked whether he thinks Bowie will leave his post, he replied: ‘He is a champion for his constituents. I know he will do the right thing for his constituents.’

It’s no real surprise that Scotland’s Conservatives are up in arms: a key strategy to retain their seats in Scotland does, after all, depend on the Tories maintaining firm support for the oil and gas industries. By extending the windfall tax on North Sea oil and gas giants, there is a real risk that businesses will move elsewhere and take their jobs with them.

It’s not as though Hunt and Sunak weren’t warned. Ross staged a final intervention last night, seeking out the Prime Minister at a pre-Budget drinks event. Events are said to have become a little heated, though party insiders suggest the meeting remained civil. Ross was adamant that the windfall tax extension would decimate the Tory presence in Scotland, while Sunak said it had to be done to allow for the 2p cut to national insurance. Alister Jack had to diffuse the debate, and earlier in the afternoon Chief Whip Simon Hart had even been asked to talk Ross down, amidst fears of his imminent resignation. Not that Ross’s concerns were allayed – even at noon today, there were some in the party that had their fingers crossed for a last minute u-turn on the plans.

The Chancellor tried to win over a grim-looking Ross throughout his speech today, pointing him out during his announcement of an alcohol duty freeze. ‘[He is] a formidable champion of the Scottish Whisky industry,’ Hunt gushed. It’s true that the Scottish Tories are in agreement with many parts of the Budget, from the national insurance cuts – which Sunak last weekend sold to Scottish Tory conference delegates as a ‘union tax cut’ – to freezing fuel duty and cutting VAT for small businesses. But compliments will only get you so far, as Hunt learned when Ross remained stony-faced.

It’s an embarrassing turn of events for Scotland’s Tories. Only last weekend, the Scottish Conservatives spent much of their Aberdeen conference hailing their party’s efforts to protect energy industries in the North Sea. Deputy leader of the Scottish Tories Meghan Gallacher claimed hers was ‘the only party standing up for our oil and gas sector jobs’, while John Lamont MSP told delegates the Tories ‘value’ the ‘critical’ skills of North Sea workers. Sunak himself claimed that ‘a vote for anyone else is a vote to shut down [the oil and gas] industry’ – but it remains to be seen how exactly voters in Scotland’s North East will digest today’s announcements.

A key dividing line between Scotland’s Conservatives and their competitors was the Tory stance on the energy industry. Both Labour and the SNP have lacked decisiveness on their positions on North Sea oil and gas. It doesn’t help that the SNP in Holyrood is in a coalition with the Scottish Greens, or that the Labour party have had their sights so set on Scotland’s central belt that they haven’t quite managed how to appeal to Scotland’s rural voters.There are patches of Scotland that recent polling has predicted will stay blue – and Scotland’s Tories have been hopeful that they might retain, and even gain, seats in the upcoming election. The optimism has been there for some time, despite the UK party’s poll slump. Douglas Ross told The Spectator in October: ‘We could have a really good general election.’

Today’s announcement feels to some in the north east of Scotland like a kick in the teeth – that Sunak doesn’t really care about Scotland, that all his talk of protecting North Sea jobs is hot air and that he doesn’t respect his Scottish leader. Will the threat of rebellion change Sunak’s mind? Ross will certainly hope so.