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Cost of living: Energy chief says any windfall tax should fall upon ‘those with the broadest shoulders’

The boss of energy company E.ON has said any windfall tax in the UK should fall upon “those with the broadest shoulders” as consumers face a doubling in prices.

Michael Lewis, E.ON’s chief executive, also said energy regulator Ofgem needed to look again at why prepayment meter customers are having to pay more for their energy than direct debit customers.

“We’ve lobbied for a social tariff. We would like to see the poorest customers getting a better deal, but in the end this is regulated by Ofgem,” Mr Lewis told BBC One’s Sunday Morning.

Read more: How much are things going up? Use our spending calulator

He said the company had surveyed 500 customers and found 71% of people were concerned about their energy bills, with 66% reducing their heating and about a third spending less on food as a result.

He warned predictions that October’s energy price rap rise could reach between £2,600 and £2,800 “sound in the right ballpark” but it said would depend on future price developments.

“For us, the most important thing is that the government intervenes, it’s up to the government to decide how they fund that [intervention],” he stated.

“All I would say is that it’s important that, when they are taxing to address this challenge, that they tax those with the broadest shoulders.”

He warned that a growing number of customers were falling into fuel poverty and that this would worsen later in the year.

“We are seeing a significant number of people in fuel poverty,” he said.

“That is to say more than 10% of their disposable income spent on energy, and that’s risen to around 20%, and in October our model suggests that it could rise to 40% if the government doesn’t intervene in some way.”

Benefits boost would ‘absolutely’ help

Mr Lewis said approximately one out of eight million accounts with the company in the UK are already in arrears, and he expects that to rise by 50% come October.

He added that an increase in Universal Credit would “absolutely” help “people at the bottom of the income range who are most adversely affected by this”.

His comments follow former Conservative leader Sir Iain Duncan Smith calling for benefits to be immediately increased to help the poorest cope with the cost of living.

However, his plea came as two serving cabinet ministers spoke out publicly against bringing in a windfall tax on oil and gas companies to help pay for support for people struggling.

In an interview with The Sunday Telegraph, Northern Ireland Secretary Brandon Lewis said it would “put off investment”, while Health Secretary Sajid Javid told Conservative activists in Wales he instinctively didn’t like it.

Chancellor Rishi Sunak has refused to rule out the idea, with one newspaper on Sunday reporting a staggered version of the levy is being looked at.

Government ‘will look at all the options’

Education Secretary Nadhim Zahawi, asked about a windfall tax on Sky’s Sophy Ridge on Sunday, said: “We will look at all the options. I with the chancellor, prime minister and cabinet will look at every option.”

Mr Zahawi spoke about the importance of investment from oil and gas producers, adding: “If you apply a windfall tax, they will probably have to reduce or take away their dividend. Who receives the dividend? Pensioners through their pension funds.

“Investment has to be real, which is what I think Rishi [Sunak] will demand of all these companies and to see a roadmap towards that investment. We’re not taking any options off the table.

“We want to see their investment, but also remember it’s pensioners who basically get the dividend from these companies, and if they’re going to cut their dividend because they have had a windfall tax, then that’ll make a difference to pensioners.”

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