Reed: Sunak and Truss “fighting like two rats in a sack” as energy crisis escalates

Steve Reed has argued that Conservative leadership candidates Rishi Sunak and Liz Truss are “fighting like two rats in a sack” while the government is “doing absolutely nothing” to combat the rapidly escalating energy crisis.

In a Sky News interview this morning, the Shadow Justice Secretary told viewers that Labour will “bring forward a full package of proposals in the next few days”. Reports emerged on Wednesday that the opposition party is preparing a number of interventions on the economy to help households struggling with rising bills.

Reed accused the Tories of presiding over a “zombie government” that he said has “gone slow at every single stage of this growing crisis”. He highlighted that Labour called on the government to introduce a ‘windfall tax’ “almost a year ago”.

“Initially, the government said it would never do that and then it U-turned, but it hasn’t done that properly because it turns out there’s a great big loophole in the middle of it,” the Shadow Justice Secretary argued.

“For every £1 that the energy companies are investing, they get a 91p subsidy back from the taxpayer. Now, that is money – and it will amount to billions of pounds – that is money that could be being used to help families who are right now facing seeing their energy bill rocket to an eye-watering extent from about £1,000 on average a year ago.”

Labour calculated that the delay of 137 days between Rachel Reeves first calling for a windfall tax and the Conservatives announcing the policy in May has cost approximately £1.9bn, based on the government’s own estimate that the energy profits levy will raise £5bn in its first year.

Reeves has urged ministers to use a meeting with executives from North Sea oil and gas companies today to close what the opposition party has described as a “major tax loophole”, whereby firms can claim more than 90% relief on the levy.

The Shadow Chancellor declared: “The government should be ashamed this loophole existed in the first place. This isn’t right at a time when people are worried sick about how they’ll pay their bills.”

Labour noted that the loophole had been included “despite oil and gas producers announcing bumper profits”. BP reported last week that its profits had tripled to nearly £7bn in the second quarter of the year.

British Gas owner Centrica announced in July that its operating profits for the six months to the end of June were £1.34bn – well above the £262m reported for the same period last year. Shell revealed that it made record profits of £9.5bn, an increase of 26% on the first quarter of this year, which was a previous high.

Reed warned this morning that “millions of families are desperately worried that they will be going into debt just to pay their energy bills over winter”, adding that the government is “doing absolutely nothing about coming up with proposals for how they can help people face this crisis, which is looming and terrifying”.

The cap on annual energy bills, set by regulator Ofgem, is expected to hit £3,582 from October. Bills are forecast to rise to £4,200 a year from January and then again to £4,426 in April before they eventually ease. The cap was at £1,400 a year as recently as October last year.

Sunak, as the then Chancellor, announced a £15bn package in May, which included £400 for households, but price rises are expected to wipe out the impact of the support. Both leadership candidates in the race to replace Boris Johnson in Downing Street are under pressure to announce further support.

Gordon Brown urged Johnson to agree an emergency Budget with Sunak and Truss, but No 10 confirmed earlier this week that the Prime Minister would not be making any significant fiscal interventions in his remaining weeks in the job.

Truss claimed that holding crisis talks to tackle spiralling bills would be “bizarre” and a “kangaroo committee”. She told Conservative Party members at a leadership hustings: “What I don’t support is taking money off people in tax and then giving it back to them in handouts. That to me is Gordon Brown economics.”