Commenting on Labour's plan to freeze the energy price cap by
expanding the windfall tax imposed on oil and gas companies, Andy
Mayer, energy analyst at free market think tank the Institute of
Economic Affairs, said:
"High UK energy prices are caused by a global shortage of gas and
domestic energy policies.
"Labour’s proposal to punish companies for investing in the North
Sea and continue a ban on fracking will extend the supply crisis.
It will leave us more exposed to expensive imports, unable to
help Europe reduce its reliance on Russia, and with lower tax
returns from drilling.
"It does nothing to address the windfall profits arising from
Labour’s old renewables policy, with most wind farms benefitting
from high gas prices and a subsidy, at our expense.
"It destroys the price signal, incentivising higher domestic
energy use, rather than investing in insulation and lower
use.
"It benefits those that can afford higher prices, rather than
giving help where it is needed through welfare or social
tariffs.
"It will not help businesses by undermining UK manufacturing. It
will impede energy market competition ensuring higher costs. This
will inevitably mean higher bills or taxes for far longer than
letting markets work.
"Labour repeats errors made during the last energy crisis in the
1970s, economic mismanagement through ‘make believe’ price
controls, that left the UK seeking a bailout from the IMF."
