Oil and gas windfall tax will help our manufacturing sector burn brighter
Millions of families in the UK face a cost of living crisis, with rapidly rising inflation, higher taxes and energy bills that could increase by £700 or more when the government lift the energy price cap in April.
And while there is a global gas price crisis, the Conservative’s failed energy policy over the last decade has left us uniquely exposed.
Alongside security and respect, one of the principles of Labour’s ambition for Britain is prosperity, because everyone should have the opportunity to thrive and make a good life for themselves
That was why Labour announced this week a windfall tax on North Sea oil and gas producers who are profiting from these price rises - to help fund extra support for households struggling under the burden of increased bills.
Our support will start with a cut in VAT on home gas and electricity bills. But we know that just as people are struggling, so are businesses.
Labour will work with industry to reduce Britain’s reliance on imported gas by ramping up investment in home-grown renewables and nuclear
Around the country there are hundreds of energy intensive firms in around 70 different sectors. Ceramics, steel, woodwork, and malt used in making whisky and beer are just a few examples. All rely on heavy energy consumption.
Since 2019, just like households, Britain’s manufacturers have been faced with an enormous fivefold increase in the price of gas.
High energy prices have cost UK steelmakers an extra £90 million this year and £345 million over the last six years - the equivalent of almost two years' capital investment.
And on average, British producers are paying 61 per cent more than their German counterparts for electricity, and 51 per cent more than the French.
Yet the Conservative government refuses to act, putting thousands of jobs at risk and undermining communities across the country.
Labour has a plan. We would allocate a £600m contingency fund from the oil and gas windfall tax to support our businesses and energy intensive industries with the short term pain of rising energy costs.
And in the long term, Labour will work with industry to reduce Britain’s reliance on imported gas by ramping up investment in home-grown renewables and nuclear.
We would back British manufacturers by investing up to £3 billion to turn the steel sector green, and we’d support British businesses by scrapping business rates and replacing them with a fairer system for the 21st century.
The Conservatives have failed to support industries time and time again. Steel is one big example of a sector that they have allowed to melt away over the years. In the early 1970s there were 320,000 steel jobs. Now there are just 33,700.
This month steel producers were warned of imminent peril to the industry because of the government’s failure to negotiate an end to unfair US tariffs. Just yesterday, Business Minister Lee Rowley told me that the government is refusing to require UK-produced steel be used in all government contracts.
This is a total abdication of responsibility. But there is hope.
Labour can and will support industry. We know that energy costs are one of the most pressing issues facing steel and other energy intensive sectors.
We have a plan to support our industry, to buy more, make more and sell more in Britain and get our economy firing on all cylinders.
And our £600 million contingency plan is just the start in reigniting a brighter future for British manufacturing built on the security, prosperity and respect that everyone in Britain deserves.
Bill Esterson is the Labour MP for Sefton Central and shadow minister for business and industry.
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