By Geoffrey Smith
Investing.com — UK Utilities Stocks Centric (LON:) and SSE (LON:) dominated morning trading in London on Thursday after the favorite in the race to become Conservative Party leader said she was not in favor of extending ‘windfall taxes’ to help households with unaffordable energy bills.
Speaking during the latest leadership contest, Foreign Secretary Liz Truss said she would not raise taxes on windfall profits from energy companies, which the opposition Labor Party claimed as the country prepares for another massive rise in energy bills this winter.
Shares of Centrica, owner of British Gas, rose 0.7%, while shares of SSE rose 0.4% on a day when the broader market was down, with the FTSE 100 losing 1.5 % at 05:10 ET (09:10 GMT).
Truss, who enjoyed a 2:1 margin over rival Rishi Sunak in some opinion polls ahead of next week’s final pick by party members, has made refusal to raise taxes the centerpiece of his campaign, aimed at capitalizing on the unpopularity of the tax increases announced earlier this year by Sunak, the former Chancellor of the Exchequer.
During the election campaign, she ruled out any further tax increases, not just a one-off tax on energy companies.
Sunak had announced a one-off take on profits from the oil and gas sector earlier this summer to fund a £15bn package of grants and rebates aimed at easing the UK’s cost of living crisis. This was in addition to an increase in National Insurance to cover the costs of a new social care funding scheme for the elderly.
However, Sunak’s measures came ahead of energy regulator Ofgem’s decision last week to raise the cap on typical fuel bills by a further 80% to the annual equivalent of 3,549 pounds ($4,110) to from October. A further big increase is likely in January under Ofgem’s current formula.
Bloomberg reported earlier this week that the UK Treasury estimates energy companies could generate some £170 billion in excess profits over the next two years, where the “surplus” reflects the difference between expected profits given the state of energy markets before and after the Russian invasion of Ukraine. . The Treasury said it “does not recognize” the numbers.