It’s always good to win – and today is one of those days!
This afternoon Rishi Sunak stood up in the House of Commons and promised to introduce a windfall tax on profits racked up by the energy giants.
This is a huge win. The Chancellor also announced a £15 billion package of support, including a £400 discount on energy bills for all and a £650 one-off payment to the poorest eight million households.
It will be paid for in part by the new windfall tax on North Sea oil company profits. This will help millions of people struggling with skyrocketing bills.
The new windfall tax will raise £5 billion this year. This is a big step forward, even if it’s only bringing in half the amount we wanted to see a windfall tax raise and there are problems with how it’s designed.
It’s not over yet
The plan has to be voted through Parliament, probably in the autumn.
So we’ll have plenty of opportunities to push for a higher rate on energy giants as the windfall tax is debated in Westminster.
We’re not going to stop pushing for energy giants to pay their share. This has to be part of broader efforts to support people in the long term with the cost of living scandal.
We couldn’t have done it without you
This is our third significant campaign win in less than 12 months. Last year we forced the government to back a minimum tax for global companies. In March we won a clampdown on dirty money with the implementation of the Economic Crime Bill.
We've tweeted about how we forced the government into these three u-turns here.
Today proves that when we work together with others in our movement, including Uplift, 350.org, Fuel Poverty Action and Greenpeace, we can achieve real change.
It’s no small thing and we couldn’t have done it without our supporters help. From reading this newsletter, to signing our petition or donating to us. It all counts, so thank you.
(Image courtesy of HM Treasury's Flickr)
Robert Palmer, Executive Director at Tax Justice UK, commented on the Chancellor’s announcement saying:
“The Chancellor has finally responded to campaigners' demands for a tax on the bumper profits of oil and gas producers.
“But Sunak's levy of £5bn still leaves shareholders pocketing billions in freak profits at the expense of struggling bill-payers.
“This one-off minimal tax falls far short. We need sustained reforms to make the tax system fairer, more support for people with ballooning bills and help with the transition to net zero.”
Further commentary from Robert on the announcement here.
A tax on excess profits by energy companies could cancel out the planned October energy price increase, new analysis by Tax Justice UK has found.
News that energy prices are likely to rise again in October has added to fears that the cost of living crisis is likely to get worse in the coming months.
However, analysis by Tax Justice UK has found that a 95% tax on the excess profits made by North Sea oil and gas producers could wipe out up to 90% of the predicted increase in energy bills.
Government statistics predict the north sea oil giants could rake in as much as £19.5 billion this year, which is £13.6 billion in excess of what they made over the preceding decade when they averaged £5.9 billion a year.
If set at the right level an excess profits windfall tax on this additional £13.5 billion profit made during a cost of living crisis, could wipe out most of the additional energy price increase predicted to hit people in coming months.
A 95% windfall tax on these profits would generate £12,866m, nearly wiping out the £14,242 million extra cost to all consumers that some have predicted in coming months.
Moves to implement an excess profits tax like this has been supported by other groups including 350.org, Fuel Poverty Action and Church Action for Tax Justice.
Tax Justice UK Head of Advocacy, Tom Peters, said: “UK oil and gas companies are announcing bumper profits, while millions of people make impossible choices about whether to heat their homes or put food on the table.
“Two companies alone have announced profits equivalent to £100,000 a minute so far this year.This isn’t a cost of living crisis, it’s a cost of living scandal.
“The government must act, by introducing a windfall tax on the extra profits that these companies are generating through luck. This would raise funds that could ease the pressure of rising energy bills for millions.”
Estimated total profits from north sea oil and gas producers over 2022 is taken from the OBR’s Economic and Fiscal Outlook, March 2022. This predicts that government revenues arising from a 40% tax rate will be £7,800m (pg.108), suggesting a total projected profit from north sea oil and gas of £19,500m in 2022/23.
‘Excess profits’ have been calculated by averaging profits over ten years using North Sea Transition Authority data. The average annual profits of oil and gas producers in the UK between 2010/11 and 2020/21 was £5,956m. This means an ‘excess profit’ expected this year (£19,500m - £5,956m) = £13,543m
A 95% windfall tax on these excess profits would generate £12,866m, over and above the normal tax applied to ‘normal’ profits.
Ofgem increased the energy price cap by an average of £693 to £1,971 for 18 million customers, and £708 to £2,017 for 4.5 million prepayment customers in April.
Cornwall Insights’ widely publicized analysis predicts that the price cap will be increased to £2,600 in October, which would increase costs by an average of £633 per customer across both tariffs. This would increase the amount paid towards energy costs by 22.5 million consumers by a total of £14,242m. The £12.9bn additional revenue from a 95% windfall excess profits tax would cover 90% of this increase.
If the price cap rises to £2,800, as per the prediction of Ofgem’s Chief Executive, then revenue of £12.9bn from an excess profits tax would cover 70% of the increased amount paid towards energy by customers from October.
New Economics Foundation research showing that 23.5m people will be unable to afford the cost of basic essentials by the end of the year - https://neweconomics.org/2022/03/spring-statement-leaves-48-of-all-children-living-in-families-that-have-to-make-sacrifices-on-essentials-this-spring-like-putting-food-on-the-table-or-replacing-clothes-and-shoes
BP and Shell have announced profits of £4.9bn and £7.3bn respectively in the first quarter of this year, totalling £12.2bn. Dividing this by 90 days, then 24 hours, then 60 minutes = £941,358 per minute.
Red Wall voters want the government to bring in a windfall tax on energy companies with the proceeds used to help people who are struggling financially.
A poll carried out by Survation for Tax Justice UK found that 79% of Red Wall voters support a windfall tax on energy companies including 84% Conservative and 85% of Labour voters.
The message is clear. People in the Red Wall want to see a windfall tax on the bumper profits made by Shell and BP.
The money raised should be used to support people struggling with rising bills. Given the local election results, the pressure is only going to increase on the Prime Minister and Chancellor to do something now.
This needs to be part of a broader package to move away from our reliance on oil and gas, which is a real vulnerability given the war in Ukraine and the climate crisis. The energy giants need to be paying their share of the costs of moving to a more sustainable future
The poll was held before it was revealed this week that BP and Shell made more than £12 billion in profits in the first three months of 2022.
The sample size was 1,015 via online panel between 22nd and 28th April 2022. The data was weighted to the profile of adults aged 18+ in the Red Wall area. Data were weighted by age, sex, region, 2019 General Election Vote and 2016 EU Referendum Vote.
Download the full results:
It's been a windfall week for the giant energy companies after BP and Shell announced profits of £12 billion in the first three months of 2022.
That’s £133 million a day or nearly £100,000 every minute. These excess profits are driven largely by the war in Ukraine and surging energy prices.
At the same time as the energy giants are making billions in profits, millions of families can’t keep up with their bills. Energy, food, fuel and other everyday costs are soaring. From pensioners to children, too many are being plunged into poverty as a result. Many people are left with the choice between heating their homes or feeding their families. This is a scandal.
The pandemic showed that politicians can choose to support people when times are tough. The government has to act.
This is why we’ve decided to take action. With our friends at 38 Degrees and we’ve set up a petition that we would love you to sign up to.
We need fair taxation to tackle this cost of living scandal. Sign our petition here.
Boris Johnson and Rishi Sunak must do more to help people struggling to pay their bills. They should pay for this by levying a windfall tax on the bumper profits of the energy giants.
It should be part of a broader package to make the tax system fairer by cracking down on tax dodging, closing tax loopholes and ensuring the wealthy pay their share.
We’ve been in the media all week making the case for a windfall tax and it’s becoming harder to see why the government hasn’t acted yet.
Our Head of Movement and Partnerships, Sara Hall, made the case to LBC News. Our Head of Advocacy spoke to Talk TV’s Julia Hartley Brewer. There’s growing support across the political spectrum for action.
This is not an issue that we are prepared to drop. Add your voice to the chorus of people calling for a windfall tax on energy company profits.