We need to really go after oil and gas profits to drive down energy bills  – Richard Burgon MP

“As a society we have a very clear choice. Either we let firms make huge profits on the back of soaring energy bills for millions. Or we act and put the needs of people ahead of the energy giants.”

By Richard Burgon MP

Soaring energy bills are driving the biggest fall in living standards in living memory. The scale of suffering we have already witnessed is heart-breaking – from children missing meals as families simply can’t afford the basics to pensioners riding buses all day to keep warm.

But the sad truth is that this is nothing compared to what we are going to face in the coming weeks. Without urgent action from the new Prime Minister, literally millions of families will be thrown into a catastrophe.  

As a society we have a very clear choice. Either we let firms make huge profits on the back of soaring energy bills for millions. Or we act and put the needs of people ahead of the energy giants.  

As socialists, we believe that people must come before profit. That means we need to win the fight for bold action across the board – from freezes to energy prices, to energy firms being brought into public ownership and the rolling-out of a mass programme of home insulation.

We must also urgently tackle the eye-watering levels of profits that North Sea oil and gas companies are making on the backs of higher bills for ordinary people.  

Soaring costs of gas are a key driver of higher bills. But while the price of gas is up fourfold in recent months, the costs of extracting gas have not changed anything like that. So gas companies are pocketing vast amounts in excess profits – that’s profits way beyond their normal levels.

Take Harbour Energy, the largest producer of oil and gas in the UK’s North Sea fields, which saw its profit increase twelvefold in the first six months of 2022. Or Shell which posted record profits of over £100 million every single day in the three months to June.  

The flip side of this bonanza for fossil fuel firms is millions of households being forced into fuel poverty.

The Conservative Government’s Windfall Tax was apparently meant to target these excess profits but it was deliberately set far too low and lets the oil and gas giants off the hook.  

So the North Sea oil and gas firms continue to make vast undeserved profits at levels way beyond what they had ever expected and all off the backs of higher bills for ordinary people.

That is why next week I am delivering a petition signed by tens of thousands of people to the new Prime Minister calling for the Windfall tax to be at least doubled.  

The aim of my petition is clear: to massively increase the Windfall Tax so that the oil and gas firms are not allowed to not make a single penny in excess profits from this crisis. 

This move would raise many billions in additional funding that must then be used to help people through this cost-of-living emergency.  

Doubling the additional Windfall Tax from 25% to 50% would take the oil companies’ total tax rate to 90%. That may sound high – though it is not much higher than what many fossil fuel companies have to pay as standard in other countries – but what is more extraordinary is that doing this would only bring North Sea oil and gas company profits back in line with their previous five-year average.  

Along with the removal of a new tax break that the government has handed to oil and gas companies, this hike in the Windfall Tax would raise at least £7bn more this year than the Government’s own proposal that raises £5bn. So there would be at least £12bn in total for much-needed support to people struggling with spiralling energy bills.

The TUC and the New Economics Foundation have made similar calls for much higher Windfall Taxes.  

As my petition makes clear, this is just one measure needed to help people. But it is a key one that gets to the heart of this debate: what do we value most – private profit or people’s needs? At the time of writing over 30,000 have signed the petition – I hope you add your name too.  

Featured image: Free power plant image, public domain electricity CC0 photo

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