Oil giant BP has posted its highest annual profit in eight years amid mounting pressure on the sector as the cost-of-living crisis deepens (Andrew Milligan/PA)
(Picture: PA Wire)One of the arguments against a windfall tax on BP is that we’d only be taking from ourselves.
Those billions it dishes out in dividends and share buybacks go to our ISAs and our pension funds, they say, a line of thought which assumes everyone has an ISA and a pension fund.
In any case, how much of BP do we small investors own? It’s hard to be exact but the short answer is: not much.
AJ Bell says investors with 10,000 BP shares or fewer own about 1.6% of the company.
The top BP shareholders are: Vanguard, Norges Bank, Capital Research and Blackrock, which doesn’t shout “steady income to nice retired teacher in Brighton”, does it?
Data from the pension industry suggests defined benefit schemes own about 1.6% of BP – so gets just 1.6% of its dividends.
It’s hard to tell how much other pension funds have of BP since they are so diverse, but we do know that all pension schemes have been investing less in UK equities in the last 15 years. Pension funds still get a big chunk of BP divis, but it is probably less than it was.
Leaving BP aside, the argument that our retirement accounts own such big chunks of corporate Britain that it would be folly to interfere doesn’t really stack up.
A better case against a windfall tax is that it is far from clear how it would work. Greenpeace reckons a £4 billion tax on “fossil fuel giants” could lead to a £500 cheque to six million households to cover bills.
And a billion left over to insulate the loft.
Ok, but what if they spend the money on something else?
A preferable way forward would be if our pension funds took far bigger stakes in the likes of BP and lobbied them to do the right thing. They would still make enough money to keep paying those dividends, and we’d get more of them.
