Rachel Reeves urged to raise taxes on companies profiting from Iran war

Rachel Reeves has been called to increase taxes on businesses making profits linked to the Iran war to cover the urgent living costs of UK households.

40 of the UK’s leading charities and unions have written an open letter to Sir Keir Starmer and the Chancellor, calling on the government to tackle profiteering, including Greenpeace UK, Tax Justice UK, the National Education Union and Global Witness.

They suggested instead that the government use companies’ tax revenue to provide direct cost-of-living support and invest in long-term resilience to make the UK economy less susceptible to fuel price shocks.

The US-Israeli war in Iran has caused the cost of oil to skyrocket, with Brent Crude oil prices rising above $100 per barrel since the start of the conflict as the Strait of Hormuz remains under Tehran’s control.

As oil flowed out of the strait, it had a knock-on effect on the global economy, with import-dependent countries in Asia declaring emergencies as their reserves dwindled.

Meanwhile, the Organization for Economic Co-operation and Development (OECD) has warned that the UK will be the worst hit among G20 countries, with its 2026 growth forecast downgraded to 0.7 percent from the previous forecast of 1.2 percent.

As the UK prepares to receive the financial consequences of the war in the Middle East, the open letter stated that “North Sea energy companies stand to make huge profits”.

The End Fuel Poverty Coalition has reported that profits for each month that energy prices remain at the levels seen on 18 March 2026 could result in tax revenue of over £200 million through the Energy Profits Tax.

The letter continued: “It is not right that extraordinary profits earned at the expense of ordinary people in times of crisis should be transferred to private hands and corporate bank accounts.” “Both households and businesses urgently need significant support to tackle the affordability crisis.”

The signatories said the war should be “a turning point for the UK” because “energy bills, fuel costs and the cost of basic needs will rise for households and businesses already struggling with affordability after years of a cost of living crisis.”

It comes as the government’s cost-of-living campaigner Richard Walker has called on Sir Keir to explore profit caps for energy and fuel companies.

Former Labor MP candidate Faiza Shaheen, chief executive of Tax Justice UK, which coordinated the letter, said: “UK governments have too often failed to protect households and small businesses from profiteering corporations and super-rich individuals who circle like vultures around crises.

“Spain has already frozen rents but our government has failed to show urgency.

“To help people who are already struggling, the Chancellor needs to get to grips with the situation and show that this will not be another crisis with everyone footing the bill and the rich getting richer.”

Simon Francis, of the End Fuel Poverty Coalition, said: “Gas prices have more than doubled since the end of February and households are already struggling with energy bills that have been stuck at high levels for five years.

“The latest global disruption is a stark reminder of the cost of our dependence on imported fossil fuels. Whenever conflict or instability arises overseas, ordinary households pay the price with their energy bills.

“The government must act urgently to protect households from the impact of rising prices and ensure that the billions of dollars of excess profits made by energy companies during this crisis are directed to supporting the people who need it most.

“Wiping off household energy debt, strengthening the Warm Home Discount and accelerating investment in home insulation will all help cushion the blow.”