The eye-watering levy could further smash UK taxpayers who are already having to shoulder huge tax hikes.
A Labour think-tank taxing the British public more to help cushion the blow of oil prices (Image: Getty)
A bonkers Labour think tank has called on ministers to pile more pressure on the great British taxpayer by hiking up taxes to cushion the blow of oil price spikes driven by the war with Iran. Despite the public groaning under the weight of the biggest tax burden since World War II, supposedly wise heads at the Labour Together group have suggested a temporary rise in income tax, as well as a suspension of the so-called triple lock protecting pensions.
On Friday, the think tank argued enforcing more levies on the public could rake in an extra £17 billion a year for the cash-hungry Treasury. The report said the cost of off-setting the surging energy prices meant that “we can’t fund this with borrowing” thanks to “the state of our public finances”.
The US-led war with Iran has meant the Strait of Hormuz, a vital route for oil and gas tankers in the Middle East, has seen the previous average of 138 tankers a day ship plummet to about five due to the threat of attack. The strangling of global supplies has led to volatility in oil and gas prices, feeding through to the higher fuel bills and the risk of increased household energy costs.
The huge oil price spikes have caught the Labour Government on the hop (Image: Getty)
On Friday, Chancellor Rachel Reeves and Energy and Net Zero Secretary Ed Miliband called in oil firm bosses and forecourt operators to Downing Street on to express concern about rising fuel bills. But Shadow Energy Secretary Claire Coutinho said the Government should not find the answer to the problem by hitting tax bills with a “a sleight of hand”, and Reform UK Shadow Chancellor Robert Jenrick said the idea of taxing the British public more was “completely absurd”.
Mr Miliband, dubbed “Red Ed” for his far-left views, has faced massive calls to re-open North Sea oil and gas fields to protect the nation’s supplies.
But so far he has refused to back down claiming opening the fields would “not take a penny off people’s bills” and ranting that the UK needed to get off the “fossil fuel rollercoaster”.
A think-tank has suggested raising income tax to cushion the blow of fuel price rises (Image: Getty)
The Chancellor said she would give support “to those who really need it”, with a package of help for people who rely on heating oil – which is not covered by the energy price cap – expected next week.
Gas and electricity bills are covered by regulator Ofgem’s price cap which is fixed until June, but if the conflict continues and Iran maintains its stranglehold on shipping in the Strait of Hormuz, then, households could face dramatic hikes at that point. But about 1.5 million households relying on heating oil already face soaring costs, with the price per litre doubling since the start of the crisis.
In an interview with The Times, Ms Reeves indicated a subsidy package would be set out next week: “I have found the money and we’ve worked through with MPs and others a response for people who are not protected by the energy price cap.
“We’re giving greater support to those who really need it.”
There is more time to draw up a plan for gas and electricity bills, because of the price cap. Analysts at Cornwall Insight have forecast that household energy bills could rise by 10% from July following sharp increases in wholesale gas prices. This would mean Ofgem’s price cap for July to September surges to £1,801 a year for a typical dual fuel household – an increase of £160 or 10% on April’s cap.
She played down the prospect of a blanket energy bailout for households, as happened in the wake of Russia‘s invasion of Ukraine at the cost of about £35 billion over a six-month period.
“It is important even when there is an economic shock – or perhaps particularly when there’s an economic shock – that you continue to be disciplined about your use of public money,” she said.
Lord Richard Walker, the cost-of-living tsar, was meanwhile asked by the BBC‘s Newsnight whether soaring petrol prices are justified.
He replied: “No, because the supplies are fine, and I’ve been told that.”
The minister also said the US-Israeli war with Iran has not made efforts to tackle living costs “any easier”.
Lord Walker added: “People are quite rightly concerned. I fully understand that. What I would say is there’s been a bit of resilience that’s now been baked in to our economy.
“I think what this has done is redoubled our resolve to try and help wherever we can with the cost of living and redoubled our efforts.”