Ed Davey said none of the candidates seem to have policies that realize the magnitude of what could happen this fall. “We’re facing a catastrophe this winter, a decline in living standards unlike anything we’ve seen in my lifetime,” he said. The Trust has previously said it would not be giving people “handouts” in the autumn despite the rises, although it has promised measures including canceling the rise in National Insurance and canceling the green levy on energy bills. The stance has alarmed several Tory MPs and a new poll for the Lib Dems found almost half of voters said they planned to spend less on food this winter due to inflation and energy prices. That number doesn’t drop significantly for Conservative voters: 41% said they would spend less on food. Davey said his proposed intervention was expensive and radical, but it was the only measure that would save many families from dire poverty this winter. A quarter of respondents said they will not turn on their heating this winter. Davey, a former energy secretary, said it would cost £36bn a year and a new, wider windfall tax on oil and gas companies’ profits should be imposed, with fewer exemptions. He said he hoped it could bring in as much as £20bn. He said the government could also find money from additional VAT revenue from higher-than-expected inflation. “It would mean a huge sigh of relief across the country,” Davey said. “We looked at everything we could and the only thing it reduces is to say: this rise can’t happen.” The Lib Dems have branded the plan an “energy licence” similar to the big intervention to pay wages during the pandemic. “This price rise is another crisis – and you would be spending less than 10% of what we did during Covid to prevent people from suffering the worst social crisis in modern times,” Davey said. “These increases hit the poorest households twice as hard as the richest. So this will help the poorest households twice as much. It is dramatically progressive. And it’s simple – it means no one will be left without help, including those households where landlords may not be making rebates.” The price cap, which rose by £693 in April, is now expected to be around £3,400, a 70% increase. Canceling the increase would mean the energy bill for a typical household would remain at £1,971 a year. But the measure would be extremely costly and may have to be repeated with further increases, adding to the costs. Davey said he believed this could be avoided, calling it a “one-off investment to protect people from this particularly dramatic blow”, but said further measures were likely to be needed. Ed Davey. Photo: Henry Nicholls/Reuters Davey said the fossil fuel giants could still afford another tax windfall because of huge profits. BP and Shell made profits of £29bn in the first six months of the year alone. Truss said it opposes the windfall taxes and will not impose any more similar measures. As chancellor, Sunak announced a surprise tax in May which was intended to deliver £5bn with a “temporary, targeted energy profits levy” of 25% but with a 90% tax break for companies investing in oil and gas extraction in United Kingdom. Sunak has pledged to cut VAT on energy bills, a move supported by the Labor Party, which has said it will also scrap tax breaks for oil and gas companies. Davey said there was no option but to tax producers further. “This is a genuine windfall… It is the duty of a government that believes in justice to have a fair tax system. In our view, this means taxing them properly and canceling this price increase.”
