As people struggle to keep warm, the windfall tax is scandalously insufficient

Oil and gas company Shell has today reported its highest profits in its 115-year history. The firm’s profits rose to $39.9bn (£32.2bn) in 2022 – more than double those of the previous year. Reacting to the news, Shadow Climate Change and Net Zero Secretary Ed Miliband accused the Tories of “letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax”, arguing that Rishi Sunak is “too weak to stand up for the British people”. TUC general secretary Paul Nowak denounced the profits as “obscene” and an “insult to working families”. He echoed Miliband’s call for an expanded windfall tax, declaring: “Instead of holding down the pay of paramedics, teachers, firefighters and millions of other hard-pressed public servants, ministers should be making Big Oil and Gas pay their fair share. There is nothing stopping Rishi Sunak and Jeremy Hunt from making that political choice.”

Shell announced in October that it had paid no UK windfall tax up to that point, despite the government introducing a levy on the “extraordinary profits” of the oil and gas sector in May last year. The company said today it had taken a $1.9bn charge related to windfall taxes in the EU and UK but did not confirm how much it had contributed to each one. Amid a cost-of-living crisis that saw an estimated three million low-income households unable to heat their homes during December’s cold snap, it is a scandal that the government continues to resist calls to further strengthen its windfall tax. Jeremy Hunt announced in November that the levy would be raised from 25% to 35% and extended to the end of March 2028, but Labour has identified other changes the Chancellor could make to increase revenue, including scrapping the investment allowance included in the levy, a tax relief intended to encourage energy companies to continue investing in the UK.

The Resolution Foundation think tank estimated last month that the energy bills of a typical household in 2023/24 will be 43% higher than in 2022/23 partly as a result of changes in the support schemes on offer from the government. The government’s energy price guarantee, which limits the amount suppliers can charge per unit of energy used, will rise in April from £2,500 to £3,000 a year for a typical household, while its energy bills support scheme, which saw households receive £400 off their energy bills spread across six monthly instalments, is due to end in March. Already struggling households are reaching yet another cliff edge on energy costs, and the government must act. If the desperation of the situation wasn’t already obvious, an investigation by The Times revealed that debt agents working for British Gas have been breaking into vulnerable customers’ homes to fit prepayment meters. On these types of meters, if families cannot afford to top up, their heating is cut off.

On LabourList this morning, we have a piece from MP Nick Smith arguing that the government’s decision to introduce voter ID for future elections is unnecessary, expensive and a “disaster for democracy”. He writes: “Statistically, a person is more likely to be struck by lightning than have their vote used by someone else. This is the government wasting millions on a solution without a problem.” Sign up to LabourList’s morning email for everything Labour, every weekday morning.