Labour Peer Calls for Profit Cap on Energy and Petrol Companies
Richard Walker, a Labour Party peer and executive chairman of Iceland supermarkets, has publicly urged Sir Keir Starmer and government ministers to consider implementing a temporary profits cap for energy and petrol firms. In a column published in the Sunday Times, Walker emphasized the need to prevent producers and retailers from exploiting the current crisis to make windfall profits at the expense of consumers.
Concerns Over Profiteering During Economic Strain
Walker clarified that as a business leader, he supports profit as essential for investment, employment, and tax contributions. However, he expressed strong opposition to profiteering, particularly when families are facing significant financial pressures. His comments come amid warnings from KPMG that economic growth could slow dramatically this year, potentially dropping from 1.3% in 2025 to 0.7% due to the ongoing energy shock.
Yael Selfin, chief economist at KPMG, highlighted that weaker growth prospects and rising cost pressures might lead firms to scale back investment plans. Consumers could also reduce discretionary spending to cope with higher prices, exacerbating the economic downturn.
Potential Impact on Household Bills and Petrol Prices
According to KPMG, household energy bills could increase by approximately 10% or more if the conflict persists. Chris O'Shea, chief executive of Centrica, which owns British Gas, noted that while an increase in energy prices may be unavoidable given the Middle East conflict, the impact on gas and electricity bills might be less severe than on petrol prices.
O'Shea explained that the closure of the Strait of Hormuz has disrupted about 20% of global oil supply but only 3-4% of global gas supply. He suggested that consumers are likely to feel the effects more acutely at petrol pumps than in their energy bills.
Calls for Collaborative Crisis Management
Paul Nowak, general secretary of the Trades Union Congress (TUC), echoed the need for proactive measures, drawing parallels to the pandemic response. He advocated for collaboration between unions, employers, and the government to protect jobs, support businesses, and provide security during uncertain times. Nowak stressed that with the UK and global economy facing significant shocks from the conflict, a united approach is crucial to mitigate damage and address the crisis effectively.
