Britain’s big gas producers and electricity generators are said to be in line to make excess profits of up to £170bn over the next two years.
Profits in the energy sector are under intense scrutiny amid the deepening cost of living crisis, with one leading forecast warning that inflation could spiral to 22 per cent next year.
Tory leadership candidates Liz Truss and Rishi Sunak are under growing pressure to freeze the energy price cap rise or agree to a huge expansion in financial support to ease the pain of soaring bills.
Leaked Treasury analysis shows the huge scale of gas producers and electricity generators’ potential excess profits in the two years ahead, according to Bloomberg News.
It reportedly shows that around 40 per cent of excess profits will go to the big power producers, though gas and electricity providers are dealing with rocketing wholesale costs as supply from Russia seizes up.
But the Treasury said it did not recognise the figures. A government spokesperson: “We don’t recognise this analysis. The government has been clear that it wants to see the oil and gas sector reinvest its profits to support the economy, jobs, and the UK’s energy security.”
They added: “We also expect our newly introduced Energy Profits Levy to raise an extra £5bn in its first year to help pay for our £37bn pound support package for households.”
Labour and the Liberal Democrats have called for an expansion in the windfall tax on gas and oil sector profits to help pay for a energy price cap freeze this winter.
Labour leader Sir Keir Starmer defended his plan to freeze energy bills for all households for six months, rather than focus on targeted support.
“I think there will be many people watching who accept ‘I’m not the hardest-up, I’ve got a decent wage, but £4,000 on my energy bills is more than I can afford’,” he told Jeremy Vine on 5 on Wednesday.
It comes as the latest poll shows 82 per cent of the British public backs the idea of freezing the energy price cap at £1,971 a year.
The Deltapoll survey also found that one in four people will “definitely” not be able to afford the looming hike to more than £3,500, while 40 per cent said they would “probably” not be able to pay the extra costs.
Small business owners have warned that that they are facing a 400 per cent rise in their energy bills, with pub chiefs warning that many will be forced to shut down this winter.
The Treasury has drawn up plans for a business rate rebate to help small firms with soaring energy bills – a scheme similar to Covid business rates relief scheme, according to i newspaper.
Boris Johnson said on Wednesday that Britain is “absolutely not” broken at the end of his premiership – claiming that the country “has everything going for it”.
“Look at the place that people want to invest in,” he told broadcasters. “Which is the country that attracts more venture capital investment now than China? It’s the United Kingdom … Why do people want to come here? Because it is the place to be.”
Johnson has claimed his successor – whether Truss or Sunak – will announce a new “going to do is provide a further package of support for helping people with the cost of energy”.
Truss has yet to commit to any further direct payments to ease the pain of rising bills, but she is said to be considering boosting support to the most vulnerable through the benefits system.
Truss and Sunak will make a final push to win over Tory party members at the final leadership hustings at Wembley Arena on Wednesday evening, before voting closes at 5pm on Friday.
Sunak has warned that there is a risk of markets losing confidence in the British economy – as he said he struggled to see how his rival plans “add up”.
In an interview with the Financial Times, Sunak said it would be “complacent and irresponsible” for a prime minister and chancellor “not to be thinking about the risks to the public finances”.
