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Rishi Sunak’s ‘Help for Energy Firms’Show Who He’d Serve as PM
The Chancellor is refusing to raise taxes on companies making billions for their shareholders from rising energy prices, reports Adam Bienkov
The Chancellor Rishi Sunak told the House of Commons on Thursday that it is impossible to “artificially” keep energy prices down.
“It is not sustainable to keep holding the price of energy artificially low”, Sunak said.
“For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.”
His comments on the supposed inevitability of rising energy bills came as Ofgem announced it will raise the energy price cap by 54%, adding around £700 a year to average bills.
Yet on the same day Sunak insisted that such rises are inevitable, the energy firm Shell announced that their own profits have increased by fourteen-fold.
The company said their profits have soared to $20 billion and they plan to hand $8.5 billion to shareholders in share buybacks.
Yet when pushed today by Labour’s Shadow Chancellor Rachel Reeves to impose a windfall tax on such companies, Sunak flatly refused.
He told Reeves that while windfall taxes “sound superficially appealing” to do so would only “deter investment”.
“Of course they sound superficially appealing, Mr. Speaker, but we on this side of the House deal with complex problems in a responsible way”, Sunak said.
However, on the same day that Sunak insisted it would be irresponsible to raise taxes on oil and gas companies, his boss the Prime Minister insisted that it was completely responsible to raise taxes on everyone else.
Boris Johnson confirmed to Sky News that the Government will not delay or scrap its plan to raise National Insurance in April.
The Government also resisted calls today to cut VAT on energy bills, with Sunak saying that to do so would only create a “permanent Government subsidy on everyone’s bills”.
These are choices with consequences.
Analysis today by the Joseph Rowntree Foundation found that even when you take into account the energy bill deferral and council tax discount schemes announced by Sunak today, lower income households are still going to much more badly hit.
Their analysis found that low income households will on average have to spend 16% of their incomes on energy bills compared to just 5% for middle earners, with single adult households on low incomes spending a massive 43% of their incomes on fuel.
And while some lower income households will benefit from the council tax discount announced by Sunak, the vast majority of the benefit will go to households who are not in poverty.
“The Chancellor has made his choice, the harder choices will now be coming for those who still can’t afford essentials for themselves and their families”, JRF’s Deputy Director of Policy and Partnerships, Katie Schmuecker, said.
Of course it is possible to debate the benefits of putting additional taxes on energy firms. However the decision not to impose them, while raising taxes on everybody else, is a deliberate political choice with consequences.
Other countries have taken different choices.
In France, Macron’s Government plans to force the state energy company EDF to limit price hikes to 4%, costing the company £7 billion. Meanwhile in Norway, the Parliament voted in December to subsidise all domestic energy bills, with additional money going to the least well-off households.
These are not inevitable decisions, but political choices.
The choice that Sunak took today tells us a lot about who he plans to help, if and when he succeeds Johnson as Prime Minister.