Labour’s solution to energy prices – is it sensible and will it work?

Keir Starmer: what does he have for us? Armfuls of nothing.

The answer to the question in the headline is: probably not, although it does contain some reasonable points.

This Site mentioned the big hole in Labour’s proposals to beat the energy price increases previously – taxing the oil and gas giants on their profits won’t help if the money is used to stop them from making any profits (by ensuring that customers don’t pay more).

Bear in mind that costs are expected to rise hugely over the next few months; if people were only asked to pay the same as now, and the companies were taxed on their current profits to make up the difference, a deficit would have to appear somewhere.

And it seems Labour is basing its figures on the amount of profit made by these firms internationally – meaning that taxing them on the full amount to raise money in the UK would break international tax law.

According to the BBC,

The party also said it would raise £14bn from other measures such as dropping the £400 energy rebate, and abandoning pledges made by the the Conservative leadership contenders – such as halting the “green levy” on fuel bills, which Ms Truss is proposing, or scrapping VAT on domestic fuel bills which Mr Sunak has promised.

How does that help bill-payers when it is denying them the benefit of a £400 payment, or the benefits of suspending the green levy (which I don’t think is a good idea anyway as it gives support to the fossil fuels that are stinking up the planet and causing climate change) and scrapping VAT on domestic fuel bills? Those will all make our bills more expensive!

But other ideas, including insulating 19 million homes to reduce energy demand and securing the UK’s energy supply by taking it away from foreign countries and companies with measures including doubling onshore and offshore wind capacity and increasing production of solar, tidal, hydrogen and nuclear power (nuclear? Really?) are better.

Ultimately it makes no difference, even though the SNP and the Liberal Democrats support the proposed price cap freeze, because the Conservatives are in office and they have already said they won’t make any decisions until a new prime minister has taken over in September.

They are unlikely to take on Labour’s taxation proposals if they can find any reason to object to them – and the concern about international taxation would certainly seem to be a red flag.

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1 thought on “Labour’s solution to energy prices – is it sensible and will it work?

  1. Stu

    There are many criticisms of the plan mainly in The Telegraph,
    With The Times stirring things up saying 4/5 Tories approve.
    So this could possibly indicate that it’s actually a good idea, but it’s indicative of the Tory’s “kicking the can down the road”.

    If this is the case, expect The Tories to rename it and adopt it in September.

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