Labour calls for windfall tax on North Sea oil and gas in bid to cut energy bills
Labour is calling for a windfall tax on North Sea oil and gas to pay for a series of measures that would cut household energy bills by around £600 per year for the country’s lowest wage earners.
The plan, unveiled today, would see every consumer save just under £200 per year and 9m of the country’s hardest hit would receive an extra £400 discount on their yearly bills.
The party’s radical policy shake-up, first reported by The Sun on Sunday, comes as energy bills are set to climb by up to £700 a year when the energy price cap increases in April in response to global price rises.
Shadow chancellor Rachel Reeves said a Labour government would save consumers an average of £100 a year by slashing VAT on energy bills and £94 by removing the cost of supplier failure and spreading it over five years.
The 9m Brits least able to afford their energy bills will also get a further £400 through an extension of the Warm Homes Discount.
Reeves said much of it would be paid for by a one-off corporation tax rise in 2022-23 for North Sea oil and gas producers.
“There is a global spike in prices, but the UK is uniquely exposed because of the failure to properly insulate our homes, failure to get on with the investment with nuclear and hydrogen and renewables, a crazy decision to get rid of our gas storage facilities and a failure to regulate the market properly,” Reeves told the BBC.
“We know pensioners for example who have to stay in more, who need their homes heated more warmly, and families already struggling with the cost of living crisis pay a higher proportion of their income on those bills. [Cutting VAT on energy bills] is a practical thing the government can do right now to help people through this difficult time.”
Boris Johnson has also been pushed by some Tory backbenchers to cut VAT on energy bills – a policy lever that has been granted to the UK now it is out of the EU.
However, the Prime Minister said last week that it is too much of a “blunt instrument” that will also benefit households that don’t need the help.
In response to this, Reeves said: “Everybody is experiencing a rise in their gas and electricity bills now, it is something practical the government could do and it would be felt immediately. What is needed is something for everybody who is experiencing a rise in their bills and then targeted additional support to those people who are struggling most.”