Energy chiefs warned to invest in UK’s future
But Truss hints at ruling out higher windfall tax as families face bills up to £5,000
LIZ Truss suggested last night that she would rule out a windfall tax on energy giants if she became prime minister as she declared that profit was not a dirty word.
The Tory leadership frontrunner said the Left-wing approach of ‘bashing business’ would drive away investment from the UK.
Asked about the billions now being made by oil and gas firms, she replied: ‘I don’t think profit is a dirty word. And the fact it has become a dirty word in our society is a massive problem.’
She told 2,000 Tory Party members: ‘In this audience, we have hundreds of people who run businesses and make a profit and I think that’s a good thing.’
Miss Truss spoke out after other ministers appeared to warn the power companies that a bigger windfall tax was still on the table if they failed to plough their profits into homegrown power generation to bolster the UK’s energy security.
Miss Truss conceded that if the companies broke the rules they should be held to account, but went on: ‘The way we bandy around the word profit as if it is something that’s dirty and evil, we shouldn’t be doing that as Conservatives. We’re playing into the hands of people like Jeremy Corbyn, who want to completely undermine our way of life.’
At the sixth of the 12th party husting events – the biggest so far, with party members filling a conference hall at Cheltenham Racecourse – the Foreign Secretary also hit out at Gordon Brown-style approaches to tackle the rising cost of living.
‘My first port of call is always reducing taxes, because I think having a money-go-round where you take off money in taxes and give it back in benefits is fundamentally a bad approach,’ she said.
The warning from other ministers followed a dire prediction that average household bills could top £5,000 per year.
The Chancellor summoned bosses to Downing Street to pressure them to plough their profits into homegrown power generation to bolster UK energy security.
Nadhim Zahawi, joined by Boris Johnson and Business Secretary Kwasi Kwarteng, told the executives the Government ‘continues to evaluate the extraordinary profits’ in the industry and that they must ‘act in the interest of the country in the face of rising prices’.
The comments were seen as a thinly veiled threat that the current £5billion windfall tax could be extended if firms hand bumper payouts to shareholders, and do not invest profits into renewables, nuclear and biomass.
A Treasury source said that ‘extraordinarily high bills will ultimately damage energy companies’.
Yesterday, experts at the energy consultancy Auxilione said they expected household bills to hit £4,467 per year from January, and £5,038 from April.
Separate analysis published yesterday also suggested prices will not return to 2020 levels for a decrelations ade. The attendees at yesterday’s crunch meeting included Michael Lewis, the £1million-a-year CEO of E.on, Tom Glover, UK chief at German renewable giant RWE, and Clare Harbord of power generator Drax, as well as representatives of the industry regulator Ofgem.
Drax took in £225million before tax in the first six months of 2021 while RWE recorded an adjusted net income of £1.3billion over the same period.
E.on UK – owned by a German parent company of the same name – made adjusted earnings of £245million before interests and tax for January to June of this year.
Critics labelled the meeting a damp squib because ministers had vowed to ‘bang heads together’ to help struggling households, but the bosses left Downing Street promising only to continue ‘working together’ with the Government.
The Prime Minister told the companies that any ‘significant fiscal decisions’ would be for the next Tory leader to take.
After the meeting Mr Johnson said: ‘Countries around the world are feeling the impact of Putin’s damaging war in Ukraine.
‘We know that this will be a difficult winter for people across the UK, which is why we are doing everything we can to support them and must continue to do so.
‘Following our meeting today, we will keep urging the electricity sector to continue working on ways we can ease the cost-of-living pressures and to invest further and faster in British energy security.’
The energy firm executives were asked to submit a breakdown of expected profits and payouts, as well as investment plans.
BP and Shell, which have recorded multi-billion-pound profits, were notable absences, leading to criticism that it was a public exercise for Mr Johnson. Mr Zahawi said afterwards that the industry leaders had ‘in the spirit of national unity, agreed to work with us to do more to help the people who most need it’.
An energy industry source claimed the message was clear: ‘Prove you’re investing enough or we might have to reluctantly impose [a] windfall tax.’
Projections for how high the price cap could get in January and April have climbed alarmingly.
Wholesale prices are now up to 15 times higher than in 2020. The Treasury has to come up with options to present to the new prime minister when they take office on September 5 – a week after Ofgem announces the price cap for October to December.
The Government has stepped in with a £400 bill rebate for all households, and up to £800 extra cash for the poorest families, which will cost the Exchequer £15billion.
Dhara Vyas, of Energy UK, which represents the industry, said: ‘The whole sector is committed to working with Government over the coming weeks to see what measures can be put in place to reduce the burden on customers.’
‘Feeling the impact’