LABOUR have called for a one-off tax on oil and gas firms to help those on low incomes deal with the incoming cost of living crisis.
Shadow chancellor Rachel Reeves claimed that a windfall tax would raise an additional £1.2 billion, and should be used to keep bills lower.
It comes as the energy price cap is set to rise again in April, with industry projections suggesting rates could increase by 50%.
In October, 15 million households saw their bills increase by 12% when the price cap, which sets the maximum price suppliers can charge consumers, rose for the first time.
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Speaking on Sky’s Trevor Phillip’s on Sunday show, Reeves said that oil and gas firms are likely to make “record profits” this year.
She said: “We’ve had ten years, more than a decade of dither and delay and incompetence from this government which is why we have this energy price crisis today.
“Of course prices have gone up globally but we are uniquely exposed in Britain because of decisions of this government, a failure to regulate properly, to get rid of our gas storage and a failure to retrofit homes and to go with the speed on new nuclear and renewables that are necessary.
Very strong performance from Rachel Reeve this morning. She’s unflappable.
— Super Tanskiii (@supertanskiii) January 9, 2022
Labour floating this in the tabloids was a brilliant move.
The most amusing aspect are all the men on Twitter trying to explain maths to a former economist for the Bank of England.pic.twitter.com/DTV9QJh28a
“That’s why today I’m putting forward a package of measures to keep bills down this April, to help families and pensioners who are struggling with this cost of living crisis that is coming in April.
“It is right to ask those who have benefited from higher gas and oil prices to pay more into the system, and that’s why I’m putting forward a one-off increase in the taxes paid by North Sea oil and gas.”
Reeves said that because of the spike in prices, oil and gas firms will see record profits.
She added: “Let's tax them a bit more and use that money to reduce bills for ordinary people who are struggling so much at the moment.
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“We estimate that just because of the higher prices, already the oil and gas industry in the North Sea are likely to pay £2.3bn more in tax, a one off windfall tax will raise an additional £1.2bn lets put that money into keeping bills lower for everybody else.”
Reeves also called for the UK Government to cut VAT and energy bills, and said Labour would cut tax on gas and electricity bills by 5% to 0 for one year - which she claimed would save households £100 a year.
She added: “The Prime Minister was the biggest advocate for cutting VAT on gas and electricity bills during the European referendum. But now when cutting those bills would make more difference than ever, the Prime Minister says no.
“Well, I say that bills can’t be paid on broken promises. The Government should honour that commitment that the Prime Minister made to take VAT off gas and electricity prices.
“If this isn’t the time to do it, then frankly I don’t know when is.”
Reeves also said Russia and other countries have the UK “over a barrel” when it comes to rising energy prices.
She said the UK is “uniquely” exposed to rising energy prices because the Government “got rid of the gas reserves, has dithered and delayed for over a decade on new nuclear and on new investment in renewables”.
She said: “As a result, we are particularly exposed to that imported gas from countries like Russia, who do have us over a barrel.
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“That is why as well as the short-term action to keep prices down, we have got to retrofit homes, speed up that investment in new nuclear and renewables, and ensure that we are never in this position again.”
Coupled with rising energy prices, the expected hike in inflation and incoming higher National Insurance contributions, many people are set to be £1200 worse off a year.
The Resolution Foundation said families are facing a cost-of-living “catastrophe” when the energy price cap goes up, NI contributions rise by 1.25% in April and inflation is forecast to peak at 6% in the spring, meaning incomes are set to stagnate.
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