Scotland’s First Minister has called on Liz Truss to expand the windfall tax to pay for an energy price freeze.
The new Prime Minister is thought to be considering capping energy prices for up to 18 months at £2,500 in a bid to tackle the cost-of-living crisis.
Nicola Sturgeon said such a move was to be welcomed.
If reports that Liz Truss is considering an energy price freeze are accurate, this is welcome— Nicola Sturgeon
While it is believed the initiative would be paid for through borrowing or general taxation, reports on Tuesday suggested an increase in bills after the freeze could be used to help pay back the debt incurred by energy companies.
Speaking as she published the Programme for Government in Holyrood, the First Minister said: “If reports that Liz Truss is considering an energy price freeze are accurate, this is welcome.
“However, the costs must not simply fall on consumers over the longer term.
“As a contribution to funding such measures, the UK Government should introduce an enhanced windfall profits tax – for example by broadening the Energy Profits Levy and removing the investment allowance.”
The UK Government announced a 25% tax on the profits of oil and gas firms, but the policy came with a loophole allowing the tax burden to be reduced if firms re-invested in the sector.
The First Minister recommended removing the loophole to help raise the necessary funding, similar to a call repeatedly made in recent weeks by the Labour Party.
Meanwhile, Ms Sturgeon reiterated her commitment to forming a “good working relationship” with the new Prime Minister, adding that she had written to Ms Truss appealing for a four nations summit on the cost-of-living crisis.
The First Minister had made similar entreaties to former prime minister Boris Johnson.
“It is difficult to overstate the gravity of the situation,” the First Minister wrote.
“This crisis puts livelihoods – and lives – at risk.
“The cost of further inaction and delay by the UK Government will be to see millions plunged into poverty and hardship, and would, rightly, be seen as an unforgivable failure of leadership.
“In these circumstances I am renewing my request for an emergency meeting with you and the other devolved governments to agree the actions needed to tackle this crisis.”
