Shadow chancellor Rachel Reeves has accused energy firms of making “war profits” from the surge in oil and gas prices following Russia’s invasion of Ukraine.
Ms Reeves said that companies should be “taxed properly” in order to help people deal with the cost-of-living crisis amid rising energy bills.
“There needs to be a proper windfall tax on the huge profits the energy giants are making, because while they make huge profits, people are paying huge bills.
“Those are the windfalls of war, they should be taxed properly, to help people with a cost-of-living crisis,” she said in an interview with the BBC’s economics editor Faisal Islam for Newscast.
“They are war profits. The only reason that energy prices rose like that is because of Russia’s illegal invasion of Ukraine. And the energy companies have benefited with higher profits on the back of that, and everybody else has been saddled with higher bills.
“Those are not profits because of the great ingenuity of the companies... that money should go into helping families with their energy bills and helping businesses who have also seen their bills go up.”
A Treasury spokesperson said the profits are being used to “ease pressure on families” in the UK.
“These funds are being used to hold down people’s energy bills and fund one of the most generous cost of living packages in the world- worth £94bn, which is around £3,300 per household this year and last,” the spokesperson said.
It comes as experts warned households to expect their gas and electricity bills to remain high for the foreseeable future.
The grim prediction came even as regulator Ofgem lowered the energy price cap from £3,280 to £2,074 from July 1.
The new cap - down because of plummeting wholesale prices - means the average household bill will fall by £426 a year and will replace the Government’s Energy Price Guarantee, which reduced the amount a typical household could be charged to £2,500 per unit of gas or electrcity, although bills could be higher or lower depending on usage.
MoneySavingExpert founder Martin Lewis said the new cap “will be a relief for many" but warned "most will still be paying more for their energy than during the winter”.
He explained: “This is because - apart from for those with high use - the drop in the rates doesn’t make up for the £66 per month state support people got until April.
“And most are on monthly direct debit, which means they pay the same in summer as winter. Overall, this still leaves people paying double or more what they did before the crisis hit in October 2021.”
The coronavirus lockdowns, cold winters, and geopolitical issues, such as Russia’s invasion of Ukraine are just some of the factors that have driven up the cost of energy.
