Mark Drakeford dismisses call for power to tax energy firms to be held in Wales
Mark Drakeford has dismissed a suggestion that the power to tax and regulate energy firms should be held in Wales.
The First Minister was asked about the subject by Plaid Cymru leader Adam Price, amid a stark rise in energy bills for households in the UK.
During a session of First Minister’s Questions, Price argued that if that power was held in the Senedd instead of Westminster, energy firms could be slapped with a slapped with a hefty “windfall tax”.
But in response, Drakeford suggested that whether Wales has the power to do that “is not the central question”, and argued that “it’s simply a matter that we need a Government in Westminster prepared to do the right thing.”
The UK’s energy sector regulator, Ofgem, said on Thursday that its price cap would be raised by 54%, an eyewatering as well as record-breaking increase.
The average household’s annual energy bill is currently between £1,277 and £1,370. The increase in the price cap means many households could see their energy bills rise by around £700 a year.
Tessa Khan, an international climate change and human rights lawyer and founder of anti-poverty campaign group Uplift recently described the profits of oil producers as “obscene”.
This was in response to the news that oil giants BP and Shell are on course to make a combined profit of almost £40bn this year from the rocketing price of petrol and gas.
Adam Price said: “Many people will have seen Andy Davies of Channel 4’s sobering film of his visit to Penrhys last week—a community already struggling now perched on the precipice of poverty the likes of which we certainly haven’t seen since the 1980s.
“Last week, the House of Commons voted in favour of a windfall tax on energy companies. The UK Government has said that it will ignore that Parliament in the same way that it does this. Spain has cut VAT on energy, but the UK Government will not, despite Johnson and Gove’s pledge to do so post Brexit. France has capped the rise in energy bills to 4 per cent, while in the UK they will rise in April by 54 per cent.
“Do you think the powers to tax and regulate the energy sector, to set a windfall tax, to cut VAT, to set a price cap, and, if necessary, to restore public ownership, should reside here in Wales where we can use them, or lie in Westminster where they won’t?”
‘Not the central question’
Mark Drakeford said: “Well, Llywydd, for me, that is not the central question. I agree very much with what the leader of Plaid Cymru said in the first part of his question, that there is a wide range of actions that the current UK Government should and ought to take to deal with the Tory cost-of-living crisis.
“It’s the policy of my party that there should be a windfall tax on the gross profits that are being made by energy companies who profiteer from the rise in prices, just as people in Penrhys and other parts of Wales suffer from them.
“My colleague Julie James wrote to the Minister in the Department for Business, Energy and Industrial Strategy back in January, setting out five separate practical courses of action that could be taken in order to alleviate the impact of fuel and other price rises on households in Wales.
“That did include reductions in VAT, it did include a differential cap on price rises to protect the lowest income households, it talked about changes to the help that is available through the Westminster Government, it made suggestions about the way in which people who owe money already to fuel companies could have those debts dealt with.
“For me, it’s not a choice between whether the power should be in Wales and exercised here, it’s simply a matter that we need a Government in Westminster prepared to do the right thing.”
In a statement on Thursday, Jonathan Brearley, CEO of Ofgem, said: “The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.
“Ofgem is working to stabilize the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”
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