Keir Starmer attacks Liz Truss over energy windfall tax stance

Labour leader Sir Keir Starmer has criticised prime minister Liz Truss for refusing to impose a fresh windfall tax on the energy industry to help fund her estimated £150bn rescue package.

Allies of Truss have said that she will on Thursday set out “gargantuan” measures to protect households and businesses from spiralling energy prices, with the cost set to be paid by the government through borrowing.

Facing Truss in her first prime minister’s questions on Wednesday, Starmer said it was unfair that the rescue package would ultimately be funded by general taxation or spending cuts rather than by more targeted taxes on big business.

The leader of the opposition did not question the wisdom of the overall package but sought instead to forge a political dividing line between himself and the Tory leader over who will end up paying for it.

Starmer pointed to Treasury estimates suggesting that the energy industry could receive as much as £170bn in windfall profits because of the sharp rise in international gas prices.

“Every pound of excess profits she chooses not to tax is another £1 of excess borrowing which working people will have to pay,” he said.

Starmer also pointed out that Truss’s plan to reverse a planned increase in corporation tax would save businesses £17bn a year, asking: “Is now the right time to protect Shell profits and give Amazon a tax break?”

In response, Truss reiterated that she was “against a windfall tax”, adding: “I believe it is the wrong thing to be putting companies off investing in the United Kingdom just when we need to be growing the economy.”

Despite those comments, a spokesperson for Truss admitted she would not cancel a windfall tax on the oil industry introduced by former chancellor Rishi Sunak, which came into effect in the spring.

Truss also criticised Starmer’s views on the economy as outdated, arguing the country would “not be able to tax its way to growth” and that there was “nothing new about a Labour leader who is calling for more tax rises . . . same old, same old tax and spend”. 

Truss said she was “on the side of people who work hard and do the right thing”, adding that she would not only scrap the corporation tax rise but also the recent £13bn increase in National Insurance.

Thursday’s announcement will see household energy bills capped at about £2,500 — roughly the same as the current cap when a one-off state payment of £400 to all households is taken into…