Labour party leader Keir Starmer today set out a plan to freeze the energy price cap on household bills by increasing the amount raised through the proposed ‘windfall tax’ on oil and gas company profits.
Starmer has proposed to close a loophole in the energy profits levy, which would give tax breaks to energy producers, and to raise £8bn from the tax by backdating the start date to January.
When former chancellor Rishi Sunak introduced the bill in May, the levy was due to be introduced alongside a tax super-deduction for companies that invested in UK oil and gas exploration.
Labour has proposed to freeze the energy price cap this winter as part of a £29bn emergency package, to be partly paid for by the extra tax on oil and gas giants.
Starmer said he “wouldn’t let people pay a penny more” on their winter fuel bills as he unveiled the party’s plan, which Labour claims will save households £1,000 on energy bills.
Starmer said the party would invest £14bn to tackle the cost-of-living crisis by preventing rising energy bills rising.
He claimed that doing so would reduce inflation and cut government debt interest payments by preventing further spending on gilts to tackle inflation.
Labour backed the plans to introduce a windfall tax in January that would help fund a package of care to reduce anticipated energy price rises, targeting an up to £600 discount on household energy bills.
The party initially proposed setting up a £600mln fund to support struggling businesses, paid for by the one-off ‘windfall tax’ on oil and gas producers.
The so-called contingency fund would also help energy-intensive industries.
The latest proposals are part of a package designed to provide emergency support for businesses, lowering business costs and limiting price increases to consumers.
Labour has said it would cut business rates for small and medium-sized businesses through an increase in the digital services tax, and scrap VAT from home energy bills for a year while expanding the Warm Homes Discount.
The Green Energy Sprint plan also involves ‘turbocharging’ homegrown renewable energy and nuclear energy capacity so the country is less exposed to global energy prices.
The windfall tax put forward by Sunak in May is currently being debated by ministers.
According to reports, Chancellor Nadhim Zahawi was due to meet with energy bosses on Thursday alongside business secretary Kwasi Kwarteng to discuss increasing the 25% levy on oil and gas companies.
He was not a supporter of the windfall tax at inception. While Zahawi said on LBC Radio that oil and gas companies “are already struggling”.
A £400 a year discount is due to be added to customer energy bills this autumn, due to be paid for through the levy.