Liz Truss has been accused of a “screeching U-turn” after the government unveiled plans to impose a windfall tax on green energy firms.
Under the Energy Prices Bill, the profits of renewables and nuclear companies would have their profits capped to stop them raking in huge profits due to record gas prices.
Ministers hope the move will save consumers hundreds of pounds off their bills and help to tackle the cost of living crisis.
But the move is at odds with what the prime minister told MPs just a month ago.
Asked if she was against a windfall tax on energy firms’ huge profits, she replied: “Yes, I am against a windfall tax.”
The latest climbdown comes after the prime minister and chancellor Kwasi Kwarteng were forced to U-turn on their plans to abolish the 45p tax rate paid by the highest earners.
And earlier this week she had to dump her plan to put a high-flying civil servant in charge of the Treasury amid fears it could further spook the markets.
Ed Miliband, Labour’s shadow climate and net zero secretary, said: “The government has finally accepted the principle of Labour’s call for a windfall tax on excess profits of electricity generators.
“After months of telling the country they were utterly opposed to the principle of a windfall tax, they have been dragged kicking and screaming to implement it.
“Yet again this shows Labour leading the agenda in British politics with another screeching U-turn from a government in office but not in power.”
Miliband also said that the cap on energy firms’ profits “must be set at a level to contribute significantly to the price support for businesses and consumers”.
But Jacob Rees-Mogg, the business and energy secretary, said the new legislation showed the government was taking “swift and decisive action” to bring down people’s bills.
He said: “Businesses and consumers across the UK should pay a fair price for energy.
“With prices spiralling as a result of Putin’s abhorrent invasion of Ukraine, the government is taking swift and decisive action.
“We have been working with low-carbon generators to find a solution that will ensure consumers are not paying significantly more for electricity generated from renewables and nuclear.
“That is why we have stepped in with exceptional powers that will not only ensure vital support reaches households and businesses this winter but will transform the United Kingdom into a nation that offers secure, affordable and fairly-priced home-grown energy for all.”