Rishi Sunak came under growing pressure on Thursday to extend a windfall tax on gas and oil giants after Shell raked in more than £8 billion in profits in just three months.
As millions of families in Britain face a cold winter due to soaring energy bills, senior MPs urged the Prime Minister and Chancellor Jeremy Hunt to target the massive earnings of gas-producing firms.
Cabinet minister Nadhim Zahawi said the Government would be considering changes to the windfall tax, which he stressed was already bringing in £5 billion a year, ahead of the Autumn Statement on November 17. The huge Shell profits of more than £1,000 a second turned up the heat on the Government to act given the worsening cost-of-living crisis.
Many households, including pensioners, are delaying putting on the heating because of the high cost of gas, which soared after Vladimir Putin cut supplies in his economic war on the West following his invasion of Ukraine. Shell reported profits, which have more than doubled, of £8.2 billion between July and September, their second highest quarter on record.
In the previous quarter, between April and June, the energy giant reported profits of £9.9 billion as oil prices surged to more than £100 a barrel, and so far this year its profits have totalled around £26 billion.
It plans to return another £3.5 billion to shareholders by buying back shares over the next three months, taking the total payout to them to £22.4 billion so far this year, and said it will also increase the dividend by 15 per cent.
Chief executive Ben van Beurden said: “We are delivering robust results at a time of ongoing volatility in global energy markets.” He recently suggested that governments may need to hike taxes on energy firms to partly pay for support packages to protect the “poorest” people from soaring bills.
At Westminster, opposition parties stepped up their calls for an extended windfall tax. “It’s time Rishi Sunak introduced a proper windfall tax and used the extra money to support people facing heart-breaking choices this winter,” said Liberal Democrat leader Sir Ed Davey, a former energy secretary. “Even the CEO of Shell has admitted that oil and gas companies should be taxed more to help protect vulnerable households.”
Shadow climate change and net zero secretary Ed Miliband added: “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. 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.”
TUC general secretary Frances O’Grady said: “These profits are obscene.” Labour’s plans would not include the investment allowances in Mr Sunak’s windfall tax and it believes this could bring in four to five billion pounds more to the Treasury. Conservative Party chairman Mr Zahawi stressed that Mr Sunak as Chancellor introduced the current windfall tax on energy producers which was raising £5 billion a year and was also designed to encourage them to invest in the UK.
Asked if it would be extended, Mr Zahawi told LBC Radio: “These are tough decisions and I know the Chancellor and the Prime Minister will be looking at everything.” Pressed again on this issue, he added: “I would not pre-empt any decisions but absolutely the Chancellor and the Prime Minister will look at every decision.”
Mr Hunt is due to present a full Autumn Statement on tax and spending plans on November 17. The Government has already pledged £60 billion to keep energy bills down this winter, for the typical household to £2,500 a year, and for businesses, with many of them including in the hospitality sector, struggling to keep going.
Mr Hunt has scrapped his predecessor Kwasi Kwarteng’s plan for the energy support package to last two years and it will now be reviewed in the spring with the aim to scale it back to offer help to just the less-well-off.
Downing Street said on Thursday any changes to the windfall tax on the profits of the oil and gas companies would be a matter for Mr Hunt’s autumn statement.
The Prime Minister’s official spokesman said: “I am not going to get into tax measures ahead of a fiscal event.
“It is accurate to say, as we made clear, no options are off the table given the economic circumstances. But clearly that is for the autumn statement.”
