Labour peer Richard Walker has called for a temporary cap on energy company profits, warning of a potential price shock linked to escalating tensions in the Middle East and the impact on household bills.
The executive chairman of Iceland supermarkets, recently appointed to the House of Lords by Prime Minister Keir Starmer, argued that ministers should examine limiting earnings for energy producers and retailers during periods of extreme market volatility. “I have asked the government to consider a temporary profit cap … to stop producers and retailers exploiting the crisis to make windfall profits at the expense of consumers,” Walker wrote in The Sunday Times.
The proposal, which would head beyond existing windfall taxes, aims to directly restrict profits during crisis periods. This move is likely to generate debate within both the business community and government, according to reports.
Walker, who left the Conservative Party in 2023 citing concerns over the government’s handling of the economy and climate change, emphasized that the intervention should be targeted and not permanent. “As executive chairman of a retailer, I have no problem with profit… But I do have a big problem with profiteering, especially when families are under real pressure,” he stated.
His comments arrive as energy markets remain volatile following escalating tensions in the Middle East, which have pushed Brent crude above $100 a barrel in recent weeks. Prices briefly surged to $119 before easing, while gas markets have also experienced significant swings following attacks on key infrastructure in the Gulf region. Disruption could lead to a substantial supply shock, potentially impacting inflation and economic growth.
The government has already convened meetings with energy producers and petrol retailers, described by Walker as a “shot across the bows,” to warn against opportunistic price increases. The Competition and Markets Authority (CMA) was also involved, with ministers indicating a willingness to strengthen its powers if necessary.
Walker stressed the need for sustained regulatory pressure to prevent companies from capitalizing on market instability. His call for tougher intervention coincides with rising costs across multiple sectors, with forecasts from Cornwall Insight suggesting average annual energy bills could increase by more than £300.
Prime Minister Starmer is expected to convene an emergency Cobra meeting this week with senior ministers and Bank of England governor Andrew Bailey to discuss further support measures, including a potential multi-billion pound package to help households manage rising bills.
Walker cautioned that the current situation risks repeating patterns seen in previous crises, where prices rise rapidly but fall slowly, leaving consumers vulnerable. “This cannot be another moment when ordinary households take the first and hardest hit, and profiteers seize the opportunity,” he said.
Existing measures, such as the energy price cap and fuel duty freezes, are providing short-term relief but are scheduled to taper in the coming months. Industry groups have previously cautioned against tighter profit controls, arguing that higher returns during price spikes are necessary to support long-term investment, including in domestic supply and the transition to cleaner energy. A previous windfall tax on North Sea oil and gas producers, introduced in 2022, had limited impact on consumer bills during periods of global price volatility.
A profit cap would represent a more direct intervention in markets and a significant escalation in government involvement, according to analysts.
Richard Walker was made an OBE in 2022 for services to business and the environment. He assumed control of Iceland from his father, the company’s founder, in 2023.
