Demands for a windfall tax on Britain’s biggest energy firms intensified on Thursday when Shell revealed record profits of more than £7 billion in the first three months of the year.
The oil and gas “supermajor” made a higher than expected $9.1 billion (£7.2 billion) between January and March, almost triple the level of last year and 43 per cent up on the previous quarter. The scale of Shell’s profits — the most it has earned in a quarter — immediately triggered fresh demands for the Government to levy a one-off tax to raise money to ease the cost-of-living crisis. It follows the £5 billion surplus made by rival BP in the same period announced earlier this week.
The combined total of more than £12 billion means that the two giants were making a profit of more than £1,500 a second between them during a period when oil and gas prices were hugely boosted by the war in Ukraine. Brent crude has risen from around $79 a barrel at the start of the year to $111.
TUC general secretary Frances O’Grady said: “The likes of Shell and BP are treating the British public like a giant cash machine. The Government must act now. The case for a windfall tax has become unanswerable.”
A one-off tax on BP and Shell alone could raise £9 billion for the Treasury, the Liberal Democrats estimate. However, it was ruled out earlier this week by Boris Johnson who said the levy would harm investment at a time of mounting concern about Britain’s energy security. The row over the profits came ahead of a Bank of England decision on interest rates at noon that was almost certain to see a fourth consecutive increase since December. The move to curb accelerating inflation would feed through to higher mortgage bills for millions of home owners, with Londoners worst hit because of the much higher cost of property.
Shell said its higher profits “mainly reflected higher realised prices, higher trading contributions across businesses, and lower operating expenses and tax, partly offset by lower volumes”.
However, its withdrawal from Russia after the invasion of Ukraine resulted in a $3.9 billion write-off. Shell shareholders were handed a total of more than $5.4 billion (£4.3 billion) during the quarter, nearly $2 billion in the form of dividends and $3.47 billion through a share buyback programme.
Chief executive Ben van Beurden said: “The war in Ukraine is first and foremost a human tragedy but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.
“The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide. We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions.” Labour’s shadow climate change and net zero Secretary Ed Miliband said: “The Government shamefully refuses to act with a windfall tax to bring down bills. Even the boss of BP has said that this will not impact investment.”
But Business Secretary Kwasi Kwarteng said in a tweet: “I welcome Shell’s plans to invest £25 billion into our energy system this decade, and their recent decision to move their global HQ from the EU to London. We’re backing North Sea oil and gas for our energy security, but in return I want to see profits reinvested back into the UK.”
