People across the country are facing a worsening cost-of-living crisis, yet the profits of some of the UK’s biggest companies are surging.

Profits’ were up 34 per cent at the end of 2021 compared to pre pandemic levels for the UK’s largest non-financial companies.

Research by the IPPR and Common Wealth argues profit restraint is needed to curb inflation. They recommend a global windfall tax that could raise as much as £10 billion. 

Our Pandemic Profits research last year argued in favour of a similar tax on excess profits made during the covid pandemic. 

Price gouging?

Why are some companies’ profits surging while an increasing number of people are facing a cost of living crisis? Research out this week from Unite argues the two might be linked.

The trade union has accused companies of driving inflation higher by engaging in “price gouging”. This is where businesses hike their prices far above supply costs – applying unnecessary financial pressure on consumers.

At a time when workers are being asked to curb their calls for pay rises, this research shows that the real problem may sit with companies profiteering from a crisis.

Today we're launching a new campaign  – and we need your help.

Have you ever wondered how much your local council is paying to companies with links to tax havens?

Research by The Fair Tax Foundation found that £37.5bn of public contracts were won by companies with links to tax havens between 2014 – 19 alone.

And although the UK Government has closed many tax avoidance loopholes in recent years, an estimated £17bn of corporation tax receipts are still going astray as a result of profit-shifting alone. This is where multinational firms exploit gaps in tax rules to move profits to low or no-tax locations.

This must end.

We're demanding councils sign-up to a fair tax standard, so that no money goes to companies associated with tax havens.

Ask your council to stop buying services from tax dodging companies. It only takes 1 minute:

Local authorities can play a key role in addressing tax dodging companies.​​ Some councils have already signed-up, but the vast majority have not.

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HMRC admitted this week they have no idea how much revenue is being lost to overseas tax havens.

In a freedom of information (FOI) response, the tax authority said they didn’t know – and hadn't attempted to calculate – how much tax is being evaded by UK residents funnelling their wealth offshore.

At the same time new figures shine a light on the scale of the problem: £570bn is held by UK residents in financial accounts in tax havens.

Dereliction of duty

HRMC have all the data they need to investigate the legality of this £570bn of UK wealth sitting in tax havens, so why aren't they?

Alex Cobhan at Tax Justice Network called the situation “an outright dereliction of duty” by HMRC. Other tax experts suggested it highlights resourcing constraints at HMRC.
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We need a properly funded UK tax authority with the teeth – and political will – to investigate tax evasion and enforce the law.

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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.”

​Analysis
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. 
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-first-quarter-2022-results.pdf
https://www.shell.com/investors/results-and-reporting/quarterly-results/_jcr_content/par/grid/p0/textimage.stream/1651686236883/3813fdba0a4c9b94e1f8f72b54282c28e70e456d/q1-2022-qra-document.pdf
https://www.bbc.co.uk/news/business-61304001
https://www.bbc.co.uk/news/business-61330552
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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
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​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: 

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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.

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This week the 2.5% increase to National Insurance Contributions took effect.

It is really important to emphasise that this was a political choice and other options were available to the government to help fund social care. 

It would have been better if the government had closed the tax loopholes used by the wealthy and aligned capital gains tax with income tax. This could raise roughly the same amount as the National Insurance increase - £11 billion. 

It comes in the same week it was revealed that Shell received more than $120 million in subsidies from the UK Treasury in 2021, despite record gas prices and high oil prices. 

So, in the year Shell made $19.3 billion in profit, they paid zero tax. Instead, the UK government paid Shell more than $120 million.

This revelation only adds to pressure on Boris Johnson and Rishi Sunak to impose a windfall tax on oil and gas companies. This would raise money that could go to supporting struggling people around the country. We are joining with campaigners from the climate movement and others to force Sunak to take action.

At a time when ordinary families are facing the burden of extraordinary energy bills, it’s only right that measures like a windfall tax be considered as a way of funding extra support.

You might have received a letter from your council recently confirming plans to increase your council tax.

Nationally it is set to increase by £67 to an average of £1,966 from April. I spoke to the Daily Express and the Daily Mirror about the tax rise.

This is going to worsen the cost of living scandal faced by families right now. 

An increase in council tax will hit poorer households much harder than wealthier ones. It's a political choice to be allowing council tax to rise while also putting up national insurance.

Our friends at the campaign group Fairer Share have built a neat interactive map where you can find out how council tax is changing in your area.

Rishi Sunak needs to rethink. He should also implement a windfall tax on oil and gas companies like BP, who are enjoying a massive windfall while people across the country struggle to pay their energy bills.

He should close the tax loopholes open to the rich and powerful. 

In the US President Joe Biden is planning to try to tax the runaway wealth of America’s billionaires. Rishi Sunak should take inspiration from these moves.  

The Guardian reported that the President will try to bring in a new law next year for a minimum tax on the unearned wealth of America’s ultra rich elite.

It will be interesting to see if the plan gets voted through. Biden’s previous attempts to legislate for higher taxes have met with opposition from some conservative Democrats who have already stymied his domestic agenda.

In the UK, the Labour Party are increasingly talking about the need to tax wealth more. The Shadow Chancellor Rachel Reeves has made it known that she wants to shift the focus of the tax system from income to assets. 

Our research found that the public would back such a move. 

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