Liz Truss: No windfall tax on energy companies
Liz Truss on Thursday night rejected calls to increase the windfall tax on energy companies to fund cost of living handouts for households, saying profit is not a “dirty word”.
The Foreign Secretary said she was “absolutely” against such taxes, arguing that such a policy approach would be taken by Labour.
The remarks are her clearest yet on the subject and come despite the Treasury devising an expansion of the windfall tax as an option for the next prime minister.
As a new forecast predicted that annual energy bills could soar to more than £5,000 next April, Ms Truss also said she would lift the ban on fracking.
Speaking at The Telegraph’s Tory leadership hustings in Cheltenham – which drew the biggest audience of the leadership contest so far – she said: “I don’t think profit is a dirty word, and the fact it’s become a dirty word in our society is a massive problem.
“One thing I absolutely don’t support is a windfall tax. I think it’s a Labour idea, it’s all about bashing business, and it sends the wrong message to international investors and to the public.”
The Foreign Secretary is the front-runner in the leadership race, having led in successive Tory member polls – but Rishi Sunak, her rival, secured more support from Telegraph readers in a live online vote during the hustings.
Both candidates have this week faced scrutiny of their plans to help households with the cost of living crisis.
Customers face more pain next year if annual energy bills soar to more than £5,000. Ofgem, the energy regulator, may have to set the price cap at £5,038 per year for the average home because of high gas prices, Auxilione, an energy consultancy, said.
Experts said the cap could hit £4,467 in January, with such a scenario leaving the average household paying £571 for energy that month. Auxilione warned that the cap was likely to remain above £4,000 throughout next year, saying there was little that could be done to directly bring prices down.
On Thursday, Boris Johnson led talks with bosses over ways in which the energy sector can offer relief for households. The Prime Minister told them high prices risked damaging the sector, but no new policy steps emerged.
It emerged this week that Treasury officials are preparing options for Mr Johnson’s successor on how to tackle the cost of living crisis, including enlarging the existing windfall tax on energy companies.
But on Thursday Ms Truss made it clear that she opposed that move, appearing to defend energy firms that have made expanding profits. Rising energy costs have seen oil and gas companies enjoying bumper profits, with BP recently announcing a tripling of underlying profits to £6.9 billion in the last quarter.
Ms Truss said: “First of all, I don’t think profit is a dirty word, and the fact it’s become a dirty word in our society is a massive problem. Because in this audience today we have hundreds of people who run businesses and make a profit.
“Of course, the energy giants, if they’re in an oligopoly, should be held to account, and I would make sure they were rigorously held to account.
“But the way we bandy around the word profit as if it’s something that’s dirty and evil... we shouldn’t be doing that as Conservatives and we’re actually playing into the hands of people like Jeremy Corbyn, who want to completely undermine our way of life.”
Mr Sunak, the former chancellor, accused Ms Truss of economic irresponsibility over her willingness to borrow more to pay for tax cuts, saying: “What I will not do is pursue policies that risk making inflation worse and last far longer.”
He said it would be wrong to make future generations pay off extra borrowing, saying: “It’s not responsible and it’s certainly not Conservative.”
Mr Sunak said he would prioritise helping pensioners and low earners deal with rising fuel prices and claimed Ms Truss’s plan would leave them “at risk of real destitution”, adding: “I think that is a moral failure.”
Separately, he has promised every household a £200 reduction in bills by abolishing VAT on energy. He wrote in The Times on Thursday night: “If it requires some limited and temporary, one-off borrowing as a last resort to get us through this winter, I’m prepared to do that.
“Borrowing relatively small sums temporarily in the throes of a crisis to provide targeted support is good, Conservative government. Borrowing permanently for large, unfunded, inflationary spending commitments is a flight of fancy.”
The hustings also saw Ms Truss offer other solutions to the energy crisis, including ending the moratorium on fracking. She said: “We need to make sure we’re fracking in parts of the country where there is local support for it.” However, whether there would be local support for drilling to start remains unclear.
Ms Truss criticised the use of agricultural land for solar panels, but said she remained committed to making the UK a Net Zero carbon emitter by 2050.
She also said she would be “tough” on water companies and review how the utilities regulator was operating, stressing the need for competition in the market. The comments came amid frustration over hosepipe bans across the south of England despite water companies failing to tackle leaks.
More than 1,800 tickets were sold for the Telegraph hustings in Cheltenham – more than any hustings in the race so far according to Tory sources.
Senior party figures have suggested more than half the membership has already voted in the contest, meaning time is running out for the two candidates to change the dynamics of the race.