“In the fifth-biggest economy on earth, people are having to choose between heating and eating. Why should we accept this? There is plenty of wealth in our country – no one should ever have to go without the basics, be that food, clothing or housing.”
By Richard Burgon MP
While your energy bills are soaring, major oil and gas companies BP and Shell recently announced that they are making £85 million in profits every single day – that’s over £900 per second.
These two facts are directly related: oil and gas companies are making such eye-watering profits because you are paying higher bills after gas prices increased fivefold.
Soaring energy bills are intensifying a cost of living crisis already hitting millions of people. Fuel poverty charity National Energy Action predicts that six million households will be in fuel poverty by April when bills will soar by 54% after the energy cap is lifted.
In the fifth-biggest economy on earth, people are having to choose between heating and eating. Why should we accept this? There is plenty of wealth in our country – no one should ever have to go without the basics, be that food, clothing or housing.
A warm home is a basic right but the reality is that nearly 10,000 people lose their life in Britain each year because they are living in a cold home – with the vast majority of these linked to the coldest 25% of homes. Poor people are dying while fossil fuel companies make super profits and create climate chaos.
We need to put an end to that. So what needs to be done? The starting point is clear: a huge Windfall Tax on North Sea oil and gas companies making super-profits – that is on profits well above the normal level – with the funds then used to ensure that no one is in fuel poverty.
This comes down to a choice: the spoils of this gas price spike go into private hands to enrich the already wealthy. Or a Windfall Tax means they are used for the public good by lowering millions of people’s bills. It is a very simple choice – just as with our NHS, some things are more important than profit and the right to live in a warm home is one.
Of course, the fossil fuel companies are robustly opposed to this logic and are now sowing dodgy arguments to resist a Windfall Tax.
But these super-profits were have not come about because of great business foresight or planning but simply because these companies own much of the energy resources we all rely on.
Over the past decade, BP and Shell have paid out over £147bn to shareholders so there is no justifiable reason to claim that they can’t now afford it.
Nor do these companies need these windfall profits to fund a shift to greener energy as they now claim – they made their plans for green investment before making these super-profits and anyway the funds they are investing in green transition are way less than what they plan to invest in fossil fuels. The International Energy Agency says investment in clean energy by oil and gas companies was only around 1% of capital expenditure in 2020.
The case for a Windfall Tax is clear and is something the left needs to raise boldly at every opportunity. It has huge public support. A YouGov poll this week found that 76% support it to help families struggling with energy bills.
Windfall Taxes have been used before. There is the well-known example of Gordon Brown as Chancellor implementing a one-off Windfall Tax on “the excess profits of the privatised utilities” in 1997. Less well known is that even Margaret Thatcher’s government in 1981 imposed a levy on the super-profits banks were making at that time.
Of course a Windfall Tax on gas and oil companies cannot be the only answer to this crisis. Our wider privatised energy supply system has also led to a great price rip-off while, over the last decade alone, the main energy suppliers have paid out an estimated £47bn in dividends and the privatised National Grid billions more.
If these energy companies were in public hands – another policy with overwhelming popular support – then instead of going to line the pockets of shareholders those funds could be used to lower bills and help fund the green transition we need to move away from expensive fossil fuels.
Tory MPs – many with very close links to the fossil fuel industries – are now using this crisis to push for us to become even more reliant on gas by further exploiting North Sea reserves and to even resume fracking.
Instead, this should be the moment when we shift further to renewables – which are now the much cheaper option – and when we reduce the amount of energy we need through a huge programme of investment in insulating homes.
Fewer than half of all British homes have even a basic standard of energy efficiency and the Tories have slashed measures to address this. But with a government plan to properly insulate homes we could make millions of people’s lives more comfortable, save people hundreds of pounds each year on their bills through reduced energy use, create hundreds of thousands of green jobs in upgrading buildings and of course help meet our climate goals.
Politics is always about choices. There is always an alternative. It is time that we said loudly that the basic living standards of millions of people come before the super-profits of private energy companies.
- Richard Burgon is the MP for Leeds East and the Secretary of the Socialist Campaign Group fo MPs – follow him on Facebook, twitter and Instagram.
- The Labour Assembly Against Austerity have launched a lobby tool for you to ask your MP to back a wealth tax as an alternative to the National Insurance Hike. Please lobby your MP to sign Richard Burgon’s Early Day Motion here.