Richard Walker, the executive chair of Iceland supermarkets and a Labour peer appointed as a cost of living adviser last month, has urged the government to consider imposing a temporary cap on energy company profits. This comes as energy prices rise due to the Iran conflict, with Brent crude above $100 a barrel and gas markets experiencing sharp swings. Walker suggested a temporary profit cap to restrict earnings for producers and retailers during extraordinary market conditions.
He is not in favour of the Green Party's proposal of a comprehensive, open-ended energy price cap. There is already a windfall tax on North Sea oil and gas producers that was introduced in 2022. Officials stated there were no current plans to introduce a temporary profit cap, but the government did not dismiss the idea and did not exclude the possibility of one being implemented in the future.
One government figure commended Walker for 'thinking big thoughts', and there is an 'active discussion' happening in Whitehall about how a profit cap could function. Housing Minister Steve Reed stated there is a contingency plan in place and encouraged people to buy fuel as usual. The government has summoned energy producers and petrol retailers to Downing Street, with the Competition and Markets Authority present.
Forecasts from Cornwall Insight suggest the average annual energy bill could increase by more than £300. Keir Starmer is expected to convene an emergency Cobra meeting this week with senior ministers and Bank of England governor Andrew Bailey, while the Prime Minister is set to hold a Cobra meeting next week to discuss strategies to assist households. The proposal highlights growing pressure on the government to address energy affordability as geopolitical tensions drive up costs.
Walker's role as a cost of living adviser gives his suggestion added weight in policy debates. The temporary nature of the cap is intended to balance market stability with consumer protection during the crisis.