Miliband demands “proper” windfall tax as Shell posts huge third-quarter profits

Ed Miliband has urged the government to introduce a “proper” windfall tax on oil and gas companies after Shell reported profits of nearly £8.2bn for the third quarter, more than double the amount it made during the same period last year.

The Shadow Climate Change and Net Zero Secretary said: “As millions of families struggle with their energy bills, the fact that Shell recorded the second highest quarterly profits in the company’s history is further proof that we need a proper windfall tax to make the energy companies pay their fair share.

“Labour has led the way in calling for a windfall tax on energy companies making bumper profits in this crisis, to help fund our energy price freeze.

“Rishi Sunak’s existing plans are a pale imitation of Labour’s windfall tax and would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks.

“It tells you everything you need to know about whose side this Conservative government is on that they refuse to back Labour’s proper windfall tax whilst working people, families and pensioners suffer.”

Also commenting, TUC general secretary Frances O’Grady said: “These profits are obscene – especially at a time when millions are struggling with soaring bills. The government has run out of excuses. It must impose a higher windfall tax on oil and gas companies.

“The likes of Shell are treating families like cash machines. Today is another reminder of why [we] need to bring our energy sector back into public ownership. Households across Britain are being fleeced.”

Analysis from think tank Common Wealth has revealed that Shell’s shareholders are benefitting from a “surge” in payouts. The energy company announced £5.9bn worth of shareholder payouts in the third quarter – six times the amount it spent on low-carbon investment.

Common Wealth senior analyst Chris Hayes said: “With a recession on the horizon and the UK’s economic debate focusing once more on fiscal space, there is a renewed urgency to redistribute the huge windfalls from oil and gas shareholders to the wider economy – and to kickstart public investment in clean energy.”

The government announced in May that it would be introducing an energy profits levy on the “extraordinary profits” of the oil and gas sector. Labour had been calling for such a windfall tax to be implemented since January.

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 means businesses will receive 91p in tax savings for every £1 invested in the North Sea.

Labour has called for the investment allowance to be scrapped and for the windfall tax to be backdated to cover excess profits made since January. The opposition proposed to use the additional money raised to part-fund its plan to freeze energy bills for six months.

Announcing Labour’s plan in August, Keir Starmer said: “We’ve got to make a choice. We can either let oil and gas companies continue to make huge profits that they didn’t expect to make whilst families and millions of people struggle to pay their bills or we do something about it.”

“The Labour Party is not going to stand by. We have made the choice that those oil and gas companies should pay a windfall tax on the excess profits that they didn’t expect to make so that we can freeze the cost for families,” the Labour leader added.

British Gas owner Centrica announced in July that its operating profits for the six months to the end of June were £1.34bn – well above the £262m reported for the same period last year. Shell revealed that it made record profits of £9.5bn, an increase of 26% on the first quarter of this year, which was a previous high.

Data from energy regulator Ofgem revealed that the number of households in arrears on their energy bills rose to record levels in the second quarter of 2022, with more than two million households behind on their electricity bills and 1.8 million in arrears on their gas bills.

Commenting on Shell’s announcement today, End Fuel Poverty Coalition co-ordinator Simon Francis said: “These oil and gas firms are literally laughing all the way to the bank.

“Their soaring profits are only matched by the soaring levels of fuel poverty we are seeing across the UK. With seven million homes in fuel poverty now, rising to 11 million from April 2023. This is an increase from 4.6 million households last winter.

“The ‘Warm This Winter’ campaign has called for £14bn of additional financial support to stop people from suffering from the severe health consequences of living in cold, damp homes this winter. Over the coming days, we’ll see that the cost of this could be met by the profits of oil and gas firms in a matter of weeks.”