By Peter McLaren-Kennedy • 12 October 2022 • 0:08
Making the announcement late on Tuesday, October 11 the Department of Business said that it would cap the energy company revenues in a move not dissimilar to that agreed in the EU.
Prime Minister Liz Truss had said that she would not levy a windfall tax as that would send the wrong signal for a country that wants investment and has a growth agenda. But she has had to perform her second major U-turn, the first being the dropping of plans to do away with the highest tax rate.
According to the Guardian the government said that it would be implementing a “cost-plus revenue limit” that allowed generators to cover costs and to make an appropriate level of profits. The new plan will be implemented from January 1 2023.
Implementing a windfall tax could raise as much as £3 to 4 billion (€3.45 to €4.6 billion).
Shadow Climate and Net Zero Secretary Ed Miliband, 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 office but not in power. But the government’s delay in acting will have cost billions and the public will pay the price.”
Truss had dismissed windfall taxes during her battle to lead the Tory party calling it: “a Labour idea and all about bashing business and it sends the wrong message to international investors and to the public.”
But after a huge backlash from the markets, she has had to drop two of her headline aims highlighting her weaknesses as a leader and her miscalculation of the financial markets.
Critics say that the damage has been done and that unless there is a full U-turn markets will not return to normal, but for now, as Liz Truss makes U-turn number 2 one can only hope that it will help to normalise markets. It does, however, send the wrong signals does little to help her change the situation or the respect for her and her economic policy.
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Originally from South Africa, Peter is based on the Costa Blanca and is a web reporter for the Euro Weekly News covering international and Spanish national news.
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