Richard Walker, a Labour peer and the prime minister's 'cost of living champion', has urged the government to consider a temporary cap on profits for energy and petrol companies. He warned that firms could exploit the conflict in the Middle East to make windfall gains at the expense of consumers.
Writing in the Sunday Times, Walker said he had asked ministers to examine limiting how much businesses benefit from higher energy prices following Iran's blockade of the Strait of Hormuz. 'I have asked the government to consider a temporary profit cap ... to stop producers and retailers exploiting the crisis,' he wrote.
The call comes amid reports that Chancellor Rachel Reeves had been planning to ease the UK's windfall tax before the US and Israel attacked Iran in February. A prolonged conflict could derail economic growth and reduce fiscal headroom, according to Downing Street and the Treasury.
Consumers already face rising petrol and diesel prices, and mortgage borrowers may see higher repayments after Bank of England Governor Andrew Bailey warned of potential interest rate rises. Official figures are expected to show inflation remained at 3% in February, with the Bank forecasting it will stay above 3% this year due to the war.
KPMG warned that economic growth could almost halve to 0.7% in 2026, and household energy bills could rise by 10% or more. The TUC has called for an emergency taskforce, similar to the Covid-19 response, to protect the UK from the economic fallout.
