UK's Labour calls for windfall tax to protect people from rising energy bills

© Reuters. An electricity pylon is seen as the spread of the coronavirus disease (COVID-19) continues, in Leicester, Britain, April 25, 2020. REUTERS/Andrew Boyers

LONDON (Reuters) - Britain's main opposition Labour Party urged the government on Sunday to do more to protect families from rising power costs, calling for a windfall tax on North Sea oil and gas to offer people more help to deal with growing energy bills.

Labour, which leads the governing Conservatives in the polls, is keen to set the agenda on energy, piling pressure on Prime Minister Boris Johnson to act before an expected rise in the price cap, which sets the maximum rate a supplier can charge annually on a dual fuel tariff in England, Scotland and Wales.

Soaring wholesale energy costs have put pressure on the industry, with more than 20 energy companies, often supplying both gas and electricity to homes and businesses, having collapsed..

The opposition party said its plan would increase support for poorer households and remove value added tax (VAT) from domestic gas and electricity bills for a year. Johnson has called removing the tax a "blunt instrument" because it would also help people who didn't necessarily need it.

"There is a global gas price crisis, but 10 years of the Conservatives' failed energy policy, and dither and delay has created a price crisis that's being felt by everyone," Rachel Reeves, Labour's finance chief, said in a statement.

In the run up to Britain's Brexit referendum in 2016, Johnson argued that once outside the European Union London could cut VAT on household energy bills to help the "poorest households" - a promise Reeves said the prime minister should now honour.

"Bills can't be paid on broken promises, the government should honour that commitment that the prime minister made to take VAT off gas and electricity prices," she told Sky News. "If this isn't the time to do it, then frankly I don't know when is."