Why energy giants should face windfall tax as bills soar – Jayne Dowle

ON the day that oil giant Shell boasted of a “momentous” rise in its profits to £12bn, millions of UK citizens learned that their gas and electricity bills were set to soar through the roof just as the Bank of England again raised interest rates, putting further stress on the cost of living.
What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?

The energy regulator, Ofgem, has raised the price cap – the maximum amount suppliers can charge per unit of energy – by a staggering 54 per cent to reflect the record rise in global gas prices. This action will hit us all, whatever our income or the size of our home.

As Chancellor Rishi Sunak scrambled to announce conciliatory measures to help some households tackle the prospect of their annual energy bills topping £2,000, he ignored an obvious solution – a windfall tax on oil and other fossil fuel producers, with the proceeds going towards reducing domestic energy bills.

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This option is supported by Shadow Chancellor Rachel Reeves, the Liberal Democrats and even the Conservative former energy minister Chris Skidmore.

What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?

It is argued that applying the brakes on such a crucial cog would not help the industry recovery from the pandemic, but how is everybody else supposed to recover from the pandemic when this huge increase, up to £700 annually, is coupled with other spiralling costs?

The rising costs of energy affect businesses too, and come down especially hard on independent traders and small firms.

Economic recovery should not just be a top-down process.

Global oil and gas prices are at record highs and we can’t argue with that. However, there are some questionable Government “green” schemes and policies which eat up levies from consumers.

What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
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We’d probably all agree that renewable industries deserve support and investment – especially in our region – but less so government-backed home energy improvement ventures such as the ill-fated Green Homes Grant, which collapsed in ignominy at an eye-watering cost of £1.5bn after six months.

The National Audit Office, no less, called the idea “botched” and said it failed because officials rushed the design, put in place an undeliverable timetable and failed to heed industry warnings that it was unworkable.

The cost of supporting government policies and green schemes currently adds about £159 to the average household energy bill. Surely there must be a fairer way of financing these?

Consumer rights campaigners have long argued against what is regarded as a “regressive” tax policy, putting a disproportionate burden on fuel-poor households, and call for the Government to pay for green schemes through general taxation.

What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
What is your verdict on Chancellor Rishi Sunak's response to the energy crisis?
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Labour is also calling for a suspension of the five per cent VAT rate on home energy bills, backed by energy suppliers and consumer groups.

So far, Mr Sunak seems deaf to what would shave more than £100 off an annual bill. I fear that ordinary people may be caught in a political crossfire here; the Prime Minister pledged to cut VAT on energy bills as an attractive Brexit bonus during his EU referendum campaign. His own Chancellor makes a mockery of that promise.

Johnson has doubled back, saying cutting VAT would be a “blunt instrument”, spinning his response to say he would rather direct government intervention towards those who need the most help.

The “vast majority” of households will receive a total £350 of help to take the “sting” out of rising energy bills, the Chancellor says. This will come in two parts; in April, 80 per cent of homes in England will get a £150 discount on their council tax bill in April, but only if their home falls into council tax bands A to D.

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And in October, apparently, all domestic electricity customers will be awarded £200 off their energy bills. Don’t be fooled; it’s widely held that home energy prices will rise again this autumn, and it’s confirmed that this £200 will have to be repaid over five years, starting from April 2023.

The problem is that, whilst the Prime Minister conveniently forgets what he’s said and Mr Sunak piously announces a raft of measures designed to help some of us weather the coming storms, neither of these privileged individuals appreciates that behind the figures are real people, living in real homes and with no actual means of paying their bills.

Short-term measures for long-term problems are not the solution. What the Chancellor should be doing, really, is taking brave steps by taking on the home energy providers and coming up with a national plan to better insulate all homes, starting with the elderly and vulnerable.

Now is the time to think the unthinkable, rather than Mr Sunak’s half-measures to bolster his public appeal, if this energy crisis is not to lead to even more premature and unnecessary deaths from hypothermia.

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