Ed Davey: Cut energy bills in April and bring in “bonanza bonus” tax on oil and gas bosses

Liberal Democrat Leader Ed Davey is demanding the Chancellor cancels plans to hike the average household energy bill by £500 in April, and cuts people’s bills instead, combined with a new energy support package for businesses, schools and hospitals.

He is warning that new price hikes now will be a “hammer blow” to families and businesses already struggling and that action is needed now to save people from a “cost of living cliff-edge.”

On top of their windfall tax plan, the Liberal Democrats are now calling for a one-off “bonanza bonus” tax on oil and gas bosses making millions from sky-high energy bills, similar to the bankers’ bonus tax in 2009-10. The latest figures show top executives at BP and Shell got £17 million in salary, bonuses and pensions in just one year. The chief executive of BP received bonuses and benefits of almost £3 million last year, doubling his total annual pay.

Instead of the Conservatives’ plan to hike the energy price guarantee by £500, the Liberal Democrats want to scrap the bill hike and reduce the average energy bill to £1,971 - the level it was last April. This would save the average household an estimated £400 on their energy bills over the next 12 months. For the least well-off households, the Liberal Democrats want extra targeted support, including doubling the Warm Homes Discount to £300.

The party is also calling on the government to U-turn on its plans to slash energy bill support for businesses, schools and hospitals by 85%, and instead extend current levels of support for another six months.

The Liberal Democrat plan would mostly be funded through money already budgeted for energy support, but now unspent due to falling energy prices. Additional funds would be raised by a proper windfall tax on the record profits of oil and gas companies, including scrapping the fossil fuel investment loophole and raising the rate of the windfall tax from 35% to 40%. This could raise at least £15 billion more than the government’s current Energy Profits Levy.

Liberal Democrat Leader Ed Davey said:

“The Conservatives’ plan to hike energy bills in April will come as a hammer blow to families already struggling with soaring mortgages and rents, shopping bills and tax rises. With no plan to deal with this cost of living crisis for people or businesses, this chaotic, out-of-touch Government is instead making it much worse because they just don’t get it.

“Rishi Sunak must act now to save families from a cost-of-living cliff edge, by cutting energy bills instead of increasing them. If there’s no extra energy help for businesses, it will be more than salad and vegetables in short supply as firms as well as farms are forced to close.

“To add insult to injury, it’s just obscene that Rishi Sunak is happy for energy bosses to rake in millions of pounds in bonanza bonuses, while families struggle to put food on the table or heat their homes. People deserve a fair deal - with a large cut to their energy bills, paid for by a proper windfall tax and a one-off levy on the bonuses of oil and gas bosses.”