Liz Truss has said it would be “wrong” to make oil and gas giants pay for any freeze in energy bills, despite the companies having made £170bn in profits.
Speaking during her first outing at PMQs as prime minister on Wednesday, Truss confirmed she would unveil her plan to tackle soaring energy bills tomorrow.
Labour leader Keir Starmer has called for bills to be frozen and for it to be paid for by the extension of a so-called windfall tax on excess profits made by oil and gas companies.
A windfall tax is a one-off levy on profits made by companies by virtue of something out of their control.
In this instance, energy firms are making bigger profits than expected due to increased demand and lack of supply - in part due to Russia’s invasion of Ukraine.
But Truss confirmed she was “against a windfall tax”, arguing it was “wrong” as it would put companies off investing in the UK.
Instead it it expected Truss will pay for a price freeze by borrowing as much as £200bn, money that ultimately will have to be paid back by taxpayers.
Starmer told Truss: “She has no choice but to back an energy price freeze, but it won’t be cheap and the real choice, the political choice is who is going to pay.
“Is she really telling us that she is going to leave this vast excess profits on the table and make working people foot the bill for decades to come?
“Every single pound in excess profits she chooses not to tax is an extra pound on borrowing that working people will be forced to pay back for decades to come.”
But Truss said the UK could “tax its way to growth”, adding: “The way we will grow our economy is by attracting investment, keeping taxes low, delivering the reforms to build projects quicker.”
The new prime minister is expected to announce plans to freeze household bills at around £2,500, when she sets out her proposals on Thursday.