Should there be a windfall tax on energy companies?

There's enough for both

Good points gerryhatrick and I guess its how our leading jesters deploy the tax receipts. They certainly know how to waste it.
No matter if they're from the right, the centre or the left we have a limited gene pool pretending to run things.
No matter where they're educated they lack wisdom and those with intelligence could use it more positivley rather than mop up after our leading jester proves how thick he is when unscripted.

I get your point @ 25 quid.

If we don't get some leaders that we can respect for their honesty and intellect then we're on an increasing circle towards dystopia.
It's probably too late, but at least where not quite at the level of the USA with a significant % of flat earthers.

Things will never improve if public accept that MP's are just a reflection of society - perhaps thats just not possible in this double edged internet information age.

I agree @25 quid and one can only hope. Yep big up for the worthy MP's who work hard and as you say......have good intentions. Its the dishonest ones and those that want to protect the crud that they create. Perhaps we need a French Revolution...

No ego Z's.

Men and Power thats always been the problem for our planet...its a builtin instinct that man struggles with, may take several millenniums for us carbon units to evolve as a bit of lipi and cross dressing won't cut it.

In  the absence of Diane (aka 'Dawn') Abbott.

Labour actually suggested 'Approximately £200 per household' with an extra '£400 per eligible household' via an increased Warm Homes discount - I can find nothing where they claim £600 per head.

And they did have a 'reasonably accurate' costing based on the OBR's figures for an increase in expected VAT Receipts and North Sea revenues, plus £1.2 Billion they added via a 'one-off' 10 percentage point second surcharge on the tax on profits (currently, oil companies pay 30% Corporation Tax, plus a 10% Supplementary Charge - far lower than the the Supplementary Charge up until 2016, which was 32%).
According to at least one set of figures, from the Green Alliance, this low charge, plus a generous series of tax offsets for exploration, construction, and decommissioning, meant that in 2019, the UK government received less than $2 per barrel of oil in tax, compared to nearly $22 per barrel in Norway, and the UK government, in effect, paid oil companies to operate in the North Sea. In 2019, BP’s North Sea operations paid an effective tax rate of minus 54 per cent.

I've actually tried to calculate it out to post here, several times, but every time I try to 'bold' anything it kicks me out of the post - argggh

Labour’s calculated ‘expected additional income’ approximately £6.6 Billion composed of:

1: OBR estimated VAT revenues for 2021-2022 increased by £3.1bn as a result of rising prices.

Office for Budget Responsibility’s (OBR) Estimated VAT revenues 2021-2 at the Budget in October was £131.9bn

The OBR later produced projections that 42.2% of VAT receipts would arrive between November to March. £78bn was raised to October 2021, meaning a little under £57bn could be expected over the rest of the year. This would bring total VAT receipts to about £135 Billion.

2: The OBR’s North Sea oil and gas receipts forecast shows a £2.1 Billion increase for 2022-23

3: A Windfall Surcharge on the oil companies would raise £1.2 Billion - £1.95 Billion (this is expected to be more as profits increase, who knows we may even hit the 2007 peak of £12 Billion?)


Labour’s income calculations £6.4 Billion to £7.15 Billion



Labour’s costs

1: Remove VAT from energy bills £2.5 Billion (see calculations)

Households in UK: 27.8 million,

VAT on £1,971 OFGEM ‘Average CAP’ = £93.86

Total Cost £2,609,308,000 (Labour estimated it as £2.5 Billion, I guess they have a better idea for total UK energy bills?)

2: Increase value and scope of Warm Home Discount £3.5 Billion (see calculations)

Currently Energy companies pay £350 Million towards the Warm Home Discount with limited eligibility for the ‘Wider Group’ – Labour’s plan was to increase the scope of this to include up to 9.3 million households in ‘fuel poverty’ and pay £400 instead of £140 (Cost up to £3.72 Billion – less the £350 Million energy companies already pay in - due to rise to £475 million this year.)

3: £600m contingency fund would be established to support energy-intensive firms.


Total cost £6.6 Billion (Labour’s figures) £6,454,308,000 - £6,579,308,000 (My Calculation)

Labour additionally suggested taking the costs of the failed energy companies onto the Government's books, at a cost of £2.6 Billion, to be paid back by a lower surcharge on domestic energy bills, spread over 5 years, rather than the current value included in the Standing Charge.

Well they are fairly clear that it 'up to £600 per household' on Twitter









I got my figures for Labour's claims, in the interests of fairness, from that well known 'left-wing' paper, The Sun. Everything else (except for the £2.6 billion Labour claim taking SoLR into Government hands) I dug out from OFGEM, and the OBR Reports - I couldn't find anything which placed a total value on the costs of SoLR - my best guess is they either have OFGEM figures for what the companies were paid (which we don't have access to) or they've calculated it from the levy included in the price cap.


The whole point of Labour's argument, other than taking the £2.6 Billion (approx) hit for the companies which fall into SoLR, was that the money they were planning to use was 'additional revenue' the government (or at least the OBR) hadn't accounted for in October's budget. 

Labour didn't need 'creative accounting,' the independent Office of Budget Responsibility, and the Commons Library, gave them the basic formulae for the figures they used. 

Disclaimer 1:

The government may have allocated this money for something since October's budget, and since Labour made the suggestions, but at the point Labour costed this out, this money was not in the Government's budget figures for 2021-2.

Disclaimer 2:
The figures obviously, as with most government budgets, are a projection, there's no way to guarantee that the OBR's figures aren't over, or for that matter under.

Disclaimer 3:
I'm not sure why this idea is so controversial, it's not as if governments haven't done it before

Geoffrey Howe levied a windfall tax on bank profits, and North Sea Oil in 1981, The former was reintroduced by the Coalition, and later Cameron's government, www.gov.uk/government/publications/bank-corporation-tax-surcharge

Labour did it to the privatised utilities.

The former head of BP thought it was 'justifiable.'

www.energyvoice.com/oilandgas/north-sea/397199/former-bp-lord-browne-windfall-tax/

At the risk of getting into a 'political argument' I feel 'creative accounting' is not a 'Labour issue' it's a 'politician one' - whatever happened to George Osborne's (oft delayed) projections for 'paying down the debt,' ah well, at least no numpty's recommended reintroducing the 'Sinking Fund' yet, that one appears to have died when Churchill almost buggered the economy up (in his defence, the return to the Gold Standard was something he initially opposed, although accepting it a pre-WWI levels was his decision) - the 'Ten Year Rule' - that appears to have solely been his idea, along with his constant renewal of it.