Power giants to face windfall tax after all as Liz Truss delivers U-turn
Renewable power companies will have their revenues capped in England and Wales, after the government bowed to pressure to clamp down on runaway profits.
The announcement late on Tuesday night provoked immediate accusations that Downing Street had performed “another screeching U-turn” – having previously rejected calls to impose a windfall tax on power giants.
On the leadership trail Liz Truss repeatedly resisted calls to cap huge profits being generated by power companies, after Boris Johnson’s government imposed a £5bn windfall tax on oil and gas companies in May, taking a slice of their profits.
The business department said it was stepping in with a temporary “cost-plus revenue limit” for renewable and nuclear electricity generators in England and Wales. This will curb the amount generators can make, “allowing generators to cover their costs, plus receive an appropriate revenue,” and will come into force at the start of next year.
The detail was contained in the government’s new energy prices bill, which limits power prices for households at an average of £2,500 a year and is estimated will cost taxpayers about £89bn. It has been estimated that taxing generators such as wind and solar farms could raise between £3bn and £4bn to help offset some of this cost.
Ed Miliband, the shadow climate and net zero secretary, said: “The government has finally accepted the principle of Labour’s call for a windfall tax on excess profits of electricity generators. After months of telling the country they were utterly opposed to the principle of a windfall tax, they have been dragged kicking and screaming to implement it.
“Yet again this shows Labour leading the agenda in British politics with another screeching U-turn from a government in
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