Ed Miliband has accused the government of being “asleep at the wheel” on the cost-of-living crisis after energy companies Shell and Centrica reported bumper profits.
Shell announced today that it had made record profits of £9.5bn between April and June, an increase of 26% on the first quarter of this year, which was a previous high. The company plans to give shareholders payouts worth £6.5bn.
British Gas owner Centrica revealed that its operating profits for the six months to the end of June were £1.34 billion – up from £262m for the same period last year.
The Shadow Climate Change and Net Zero Secretary said: “As profits soar to record levels for oil and gas producers, we face a serious and worsening energy bills crisis, far worse even than a couple of months ago.
“Yet at the same time the government is proposing billions in new tax breaks for oil and gas – an obscene decision when families are facing a true cost-of-living emergency.
“Both candidates for the Tory leadership have shown themselves living on another planet when it comes to the cost-of-living emergency.
“Rishi Sunak opposed the windfall tax tooth and nail and has introduced a multi-billion tax break for the oil and gas sector, while Liz Truss appears to believe that the cost-of-living crisis can be solved by abandoning renewable energy – the cheapest form of power we have.
“The government is asleep at the wheel. They should start by getting rid of the plan to hand £4bn of public money back to the oil and gas giants making record profits in this crisis and using this money to help families.
“To bring down energy bills for good, we need Labour’s plan for a green energy sprint for home-grown power and our ten-year warm homes plan to cut bills for 19 million cold, draughty homes.”
The government’s levy includes a new investment allowance, a ‘super-deduction’ style relief intended to “encourage firms to invest in oil and gas extraction in the UK”. The investment allowance will mean businesses receive 91p in tax savings for every £1 invested in the North Sea.
Addressing the Commons during a debate on the energy profits levy, shadow exchequer secretary to the Treasury Abena Oppong-Asare described the investment allowance as an “insult to those families who are struggling” and a “mockery of our climate investment commitments”.
Commenting on the profits reported today by Shell and Centrica, TUC general secretary Frances O’Grady said: “These eye-watering profits are an insult to the millions of working people struggling to get by because of soaring energy bills.
“Energy bills are rising 23 times faster than wages. We need to hold down profits and boost wages. Working people are facing the longest and harshest wage squeeze in modern history. It’s time working people got their fair share of the wealth they create, starting with real action to bring bills down.”
Ofgem is expected to announce a further increase to the energy price cap next month, which could bring the average energy bill to more than £3,200 – a rise of more than 150% in one year.
The TUC unveiled a plan on Monday to keep bills down through public ownership of energy companies. Launching the plan, O’Grady said it was time to “lift the burden of failed privatisation off families”.
The affordable energy plan states that nationalisation could reduce energy bills by: ending shareholder dividends; making more money available to cut bills; creating incentives to make homes more energy efficient; and enabling pricing structures with lower costs for basic energy needs.
The TUC argued that public ownership would not only cut energy bills but also speed up energy efficiency improvements to homes and cut carbon emissions faster.
The trade union body said bringing energy companies into public ownership would mean money currently spent on shareholder dividends could instead be used to reduce bills and bring forward energy efficiency measures.
It concluded that publicly-owned energy companies would have a stronger incentive to introduce energy efficiency improvements to homes and have the power to set energy prices prioritising affordability for customers, rather than maximising profits for shareholders.