Energy companies to be ‘hauled in’ by government over ‘unprecedented’ profits, minister says

James Cleverly says companies must explain ‘what they are going to do with these unexpected, unplanned, unprecedented profits’ to chancellor Nadhim Zahawi

Energy company bosses will be “hauled in” by the government to explain “unprecedented” profits at a time when consumers face a devastating increase in bills, a minister has said.

Chancellor Nadhim Zahawi and Kwasi Kwarteng, the business secretary, are expected to hold talks with the sector on Thursday amid mounting calls for government action.

James Cleverly, the education secretary, said on Sky News the two cabinet minister will discuss with energy firms “what they are going to do with these unexpected, unplanned, unprecedented profits that they have been making because of that sudden spike in energy prices”.

He also told ITV’s Good Morning Britain: “The chancellor and the business secretary are actually calling in the leaders of those big energy companies to knock some heads together and basically hold them to account about what they’re going to do with those profits.

“The increase in energy costs has been driven by the war in Ukraine and a global crunch, this is affecting everyone pretty much across the world, everyone in the developing world is seeing those energy bills go up.”

In a major U-turn earlier this year, the former chancellor Rishi Sunak announced a £5 billion temporary windfall tax of 25 per cent on oil and gas companies to help fund a cost-of-living package.

But after experts warned energy prices could soar to over £4,000 in January, ministers are now exploring a more stringent windfall tax on North Sea oil companies after record profits, according to The Sun.

“If you look back at what these firms were projected to make and what they actually brought in, it was beyond their wildest expectations,” a Treasury source told the newspaper. “We are looking at options to go further and faster on those profits.”

While welcoming the meeting with energy companies — pencilled in for Thursday — the Money Saving Expert founder Martin Lewis stressed it was for the government to act now to alleviate the crisis.

“I’m not that sure what can come out of a meeting with the big energy firms,” he told BBC Radio 4’s Today programme. “This is way beyond meeting with them”.

He added: “What we have to do is put more money into people’s pockets to pay this. The price cap is set by a methodology published by Ofgem and it’s based on wholesale prices of gas. It’s not the big energy companies who are setting that it’s the government’s own regulator.”

“Sitting down with the energy companies is the right thing to do, but ultimately it is government and government alone who is the only one who can make the decision to stop the terrible, cataclysmic risk millions of people face in our nation this winter.”

On Tuesday Boris Johnson resisted calls to implement a support package before his successor enters No 10, but said he was “certain” whoever wins the Tory leadership race will want to make announcements about how they will “further help people”.

During a hustings event on Tuesday evening, Liz Truss, the frontrunner in the Conservative leadership race, also dismissed calls from some quarters to get together with her rival Mr Sunak and the outgoing prime minister to discuss an immediate package of support. The foreign secretary described such a move as a “kangaroo committee” and “constitutionally, deeply undesirable”.

A government spokesperson said: “We are engaging with the electricity sector to drive forward reforms and to ensure the market delivers better results for people across the UK.

“In the meantime, and as we announced in May, the government continues to evaluate the extraordinary profits seen in certain parts of the electricity generation sector and the appropriate and proportionate steps to take.”