Labour would extend windfall tax to prevent rising bills in April – Reeves

Labour would toughen up the windfall tax on oil and gas companies and stop the energy price cap from rising this spring to help millions through the cost-of-living crisis, Rachel Reeves has vowed.

In a keynote speech at the Fabian Society Conference, the shadow chancellor set out her party’s climate transition plans, promising they would be “pro-worker, pro-business and pro-climate”, while condemning ideologues who believe there is a choice between going green and going for growth.

Millions are facing a 40% increase in their energy bills come April, when Government support becomes less generous, Ms Reeves warned.

“In a week when temperatures fell below zero, I know many families and pensioners will be acutely worried about what is happening.

“And at the same time, energy giants continue to make record profits.

“That cannot be right…

“We must hold to that most basic of principles: That those who have profited from the windfalls of war should share their part of the burden in reducing the cost for others, so ordinary people do not have to bear the brunt of a crisis that they did not cause.”

A Labour government would “extend the windfall tax, closing the fossil fuel investment loophole, and taxing oil and gas giants at the same rate at which they’re taxed in Norway,” she said.

This would generate £13 billion across 2022 and 2023, savings that would be passed on to families “immediately to keep energy bills down”.

“Our plans will save the typical household £500 on their energy bills from April, compared to the Government’s plans, by keeping the energy price guarantee at its current level of £2,500 rather than letting it rise to £3,000 in April,” Ms Reeves said.

Alongside a freeze on fuel duty, the shadow chancellor also promised to eliminate the premium paid by those on pre-payment meters and a moratorium on the forced installation of such meters.

Ms Reeves also set out Labour’s long-term strategy of reaching 100% clean power by 2030 and retrofitting millions of homes, a move that could save households £1,400 each year and “prevent tomorrow’s crises”.

On climate transition, she said: “Whatever ideologues on left and right might tell you, we do not have to choose between going green and going for growth.

“In the 2020s and the 2030s, those two things go hand-in-hand.

“Now, to some on the right, climate change is nothing more than a cost or even a con. Some on the left meanwhile will claim that the only way to tackle the climate crisis is nothing short of a command economy or the overthrowing of capitalism itself.

“And then there are those on the fringes of the green movement who shudder at the very prospect of economic growth.

“I reject all those assessments and their ideological cul-de-sacs. More innovation, more investment, and more enterprise will be crucial to the green transition.

“We do not have to choose between letting the planet burn or accepting a future of diminishing living standards on a poorer country.”

Sir Keir Starmer speaks at the World Economic Forum in Davos
Sir Keir Starmer speaks at the World Economic Forum in Davos (Markus Schreiber/AP)

Ms Reeves accused the Government of “walking into crisis to crisis unprepared every time, and at the last minute producing hugely expensive fixes to get us through, while the underlying problems – those weakened foundations – go untouched”.

Both Ms Reeves and Labour leader Sir Keir Starmer were at the World Economic Forum in Davos this week, where the party called for a “clean power alliance” of countries to help bring down energy prices.

Ms Reeves mocked Rishi Sunak for using a jet for domestic trips and getting fined for failing to wear a seatbelt.

“The Prime Minister has made clear his own depth of commitment to net zero this week, when he chose to fly from Teesside to Blackpool on an RAF jet.

“Now, I understand that the air stewards had to do the seatbelt demonstration several times before the Prime Minister finally got it.”

Responding to Labour’s climate transition plans, a senior Tory source said: “Labour are so devoid of ideas that they are simply re-announcing the same inflation-fuelling policies as before.

“Only yesterday did Keir Starmer describe a windfall tax as a ‘sticking plaster solution’ to the energy crisis. Labour’s plans are not only unworkable, they would raise a fraction of the sum they say.”

Offshore Energies UK, which represents the UK’s offshore industry, warned that extending the windfall tax would “spell disaster” for energy workers and consumers.

The companies providing the gas and oil needed until net zero is reached in 2050 are the same ones that are investing in the transition, the trade association noted.

“If you undermine those companies now, and send the sector’s 200,000 skilled workers into other industries, you will damage both the nation’s current energy security and our hopes of a rapid transition to low-carbon energies,” external relations director Jenny Stanning said.

But the windfall tax plans were welcomed by Friends of the Earth, which also said: “Labour’s pledge to insulate our heat-leaking homes – to cut emissions and help slash sky-high energy bills – and to not invest in new gas and oil, are extremely sensible.”