Keir Starmer has accused Liz Truss of saddling British taxpayers with tens of billions of pounds in extra debt because she refuses to tax energy wholesalers’ excess profits to fund an emergency rescue package. Ms Truss is expected to announce on Thursday a freeze on energy bills from October with the government borrowing to fund the shortfall between what consumers pay and the soaring cost of energy.
But she told the Labour leader that she would not impose a windfall tax on the massive profits energy giants are making because oil and gas prices have surged since Russia’s invasion of Ukraine.
“Treasury estimates are that the energy producers will make £170 billion in excess profits over the next two years. The prime minister knows that she has no choice but to back an energy price freeze, but that won’t be cheap, and the real choice — the political choice — is who is going to pay. Is she really telling us that she is going to leave those vast excess profits on the table and make working people foot the bill for decades to come?” Sir Keir said.
The Labour leader also questioned the new prime minister’s promise to reverse a planned increase in corporation tax for the biggest companies. But Ms Truss said that increasing tax rates would drive investment out of Britain and that lower taxes led to higher economic growth.
“The last time we cut corporation tax, we attracted more revenue into the exchequer because more companies wanted to base themselves in Britain, and more companies wanted to invest in our country. If taxes are put up and raised to the same level as in France — that is what the current proposal is, which I will change as prime minister — that will put off investors, and it will put off those companies investing in our economy. Ultimately, that will mean fewer jobs, less growth, and fewer opportunities across our country,” she said.
Ms Truss’s first full day as prime minister saw the pound fall to its lowest level against the dollar since 1985 as investors offloaded British assets. The currency has fallen more than 15 per cent against the dollar since the start of this year, pushing up import prices and fuelling inflation.
Bank of England chief economist Huw Pill told MPs on Wednesday that freezing energy bills, which some analysts estimate will cost more than £170 billion, could slow inflation but could see interest rates rise.
Ms Truss continued to form her government on Wednesday, appointing some supporters of defeated candidates to junior ministerial posts. Steve Baker, one of the leading organisers of Brexiteer rebels on the Conservative backbenches in recent years, becomes a junior minister at the Northern Ireland Office.
Sir Keir accused Ms Truss of reheating ideas from George Osborne’s playbook when he was chancellor of the exchequer under David Cameron.
“She is the fourth Tory prime minister in six years. The face at the top may change, but the story remains the same. There is nothing new about the Tory fantasy of trickle-down economics and nothing new about this Tory prime minister who nodded through every single decision that got us into this mess and now says how terrible it is,” he said.
