BP profits “damning evidence” of government failure, Miliband says

Ed Miliband has described huge profits made by oil company BP in the last quarter, more than double the profit over the same three months last year, as “damning evidence of the failure of the government to levy a proper windfall tax”.

BP published its profits for the last quarter this morning, reporting $8.2bn – or £7.1bn – in profit between July and September this year.

The Shadow Climate Change and Net Zero Secretary said Rishi Sunak “should be hanging his head in shame that he has left billions of windfall profits in the pockets of oil and gas companies, while the British people face a cost-of-living crisis”.

“Even if he U-turns on a windfall tax now, the oil and gas companies have taken billions from the cash machine that is the British people’s energy bills — and Rishi Sunak has let it happen,” Miliband added.

“The Conservatives are not on the side of working people. Labour led the way in calling for the energy price freeze, and only our plan to make Britain a clean energy superpower by 2030 can cut bills for good.”

The government is facing calls to reform its windfall tax, introduced by Sunak while in May this year. Under the existing levy, companies receive exemptions for investing in fossil fuels. BP has said it will pay just $800m this year.

Shell also reported huge profits in the last quarter. The company revealed that it had paid no windfall tax in the UK because of its investments in fossil fuels.

Analysis published by think tank Common Wealth earlier this year found that Shell channelled over £96bn to its shareholders between 2010 and 2020. This consisted of £76.7bn in dividends and £19.4bn in share buybacks over a decade.

Common Wealth director Mathew Lawrence told LabourList that “instead of investing that money in accelerating renewables” companies like BP and Shell are “putting their shareholders first, rewarding them with billions of dollars of share buybacks”.

BP plans to buy back an additional £2.5bn of its shares. So-called ‘share buybacks’ boost a company’s share price; BP has committed to using 60% of its excess cashflow for shareholder returns and its shares have risen by 45% this year.

“We cannot rely on the for-profit energy giants – whose mission is to maximise shareholder wealth – to drive a clean, secure, and fair green energy transition. A windfall is vital to help support households – but deeper questions of the ownership and governance of the oil and gas giants are now of planetary importance,” Lawrence added.

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 using the money raised to part-fund its plan to freeze energy bills.