Many people across the Great Yarmouth constituency are understandably concerned about the increase in energy costs and the impact this is having on household budgets. As the UK economy continues its recovery from the pandemic, we must confront these global inflationary pressures caused by the world economy coming swiftly back to life. Much of this inflation is being driven by the rising cost of energy due to increased demand worldwide – and that feeds through into pressures on the cost of living.
There are limited levers the Government has to deal with these global problems. The Government has already taken steps: reducing the Universal Credit taper rate, increasing the National Living Wage, freezing fuel duty for the twelfth year in a row, and launching a £500 million Household Support Fund to help the lowest-income households with their bills.
But the government recognises that it must go further to help families with pressures on the cost of living. Although in the long-term as a country we will need to adjust to higher energy costs – the Government can help ensure the adjustment to higher prices is smaller initially and spread over a longer period.
Following Ofgem’s – the independent regulator who sets the price Energy Price Cap - confirmation that the energy price cap will rise by £700 from April, we have announced a three-part plan to help with household fuel bills immediately and protect people against half of this increase – worth £350 per household, in a total package of support worth £8.6 billion:
• A £200 ‘smoothing’ rebate on energy bills for all households, to be paid back over the next five years at £40 per year – starting from April 2023;
• A non-repayable £150 cash rebate for homes in Council Tax bands A-D – equivalent to 80 percent of all households, helping both lower and middle-income families;
• £144 million of discretionary funding for local authorities to support households not eligible for the council tax rebate.
The Government is also continuing with plans to increase the Warm Homes Discount and extend eligibility by one-third to 3 million vulnerable households which is worth £150.
Why I am opposed to a Windfall Tax
Some people are demanding the introduction of a windfall tax on oil and gas companies. The Government does not intend to introduce such measures for a number of reasons. The UK’s oil and gas sector is world-leading. Sudden rate changes would discourage investment and job creation, depress production, and make the UK more reliant on imported gas. The oil and gas industry and its supply chain support almost 200,000 jobs across the country, including many in the Great Yarmouth area. Whilst the pandemic has depressed investment there are big opportunities awaiting investment and the Government believes that a windfall tax would threaten the investment we need to support jobs and increase the economic recovery of our gas resources.
And, a 10 percent windfall tax, which has been proposed, would likely raise much less than Labour claim. It might, depending on how individual companies respond, actually reduce tax revenues. Additionally, the current tax rate charged on oil and gas profits, which is 40 percent, is already more than double the rate charged on profits in most other sectors of the economy, which is 19 percent and has been in place since 2016. For those reasons, I do not support a windfall tax.
More broadly, I am glad that the Government is working to reduce bills and tackle fuel poverty, such as through the introduction of schemes to improve energy efficiency measures in homes. The Great Yarmouth is benefitting from a multi-million-pound grant from the Government to help make improvements to homes across the borough In addition, the Government’s Energy Company Obligation and expanded Warm Home Discount schemes will provide at least £4.7 billion of extra support to low-income and vulnerable households between 2022 and 2026.