The government’s top cost of living adviser has called on ministers to explore a temporary cap on the profits of energy and petrol companies to prevent them from cashing in excessively on the war in the Middle East.
Richard Walker – a Labour peer, the chair of Iceland supermarkets and the prime minister’s “cost of living champion” – said he had asked the government to examine limiting how much businesses were able to benefit from higher energy prices after Iran’s blockade of the strait of Hormuz, a crucial shipping route for Europe’s oil and gas, and the wider conflict in the region.
“I have asked the government to consider a temporary profit cap … to stop producers and retailers exploiting the crisis to make windfall profits at the expense of consumers,” Walker wrote in a column in the Sunday Times.
“As executive chairman of a retailer, I have no problem with profit. It’s what allows businesses to invest, employ people and pay tax. But I do have a big problem with profiteering, especially when families are under real pressure.”
His comments come after suggestions that the chancellor, Rachel Reeves, had been planning to ease the UK’s existing windfall tax – the energy profits levy – before the US and Israel attacked Iran on 28 February with airstrikes that killed Iran’s supreme leader, Ali Khamenei.
They also come as Chris O’Shea, the chief executive of the British Gas owner, Centrica, said an increase in energy prices may be “inescapable” if the war in the Middle East “stays as it is”, although he predicted that petrol prices would be affected much more than energy bills.
“The world uses about 100m barrels of oil a day. We’ve lost about 20% of that through the strait of Hormuz. The loss of gas through the strait of Hormuz being closed is about three or 4% of global gas,” he told the BBC’s Sunday with Laura Kuenssberg programme.
“So the impact on gas, and therefore on electricity bills, should be lower than the impact on oil. So my gut feel is that you’ll see more of an impact of this in the petrol pumps than you will in bills.”
Asked about support to help people with bills, he said Centrica had held meetings with the government and hoped they would be looking at targeted support. “I do think targeted help is far better than blanket help,” he said.
