2 February 2023 – today’s press releases

  • Shell Profits: Sunak has failed to take action with a proper Windfall Tax
  • Lib Dem Bill to ban prepayment meters seeks to protect vulnerable from exploitation
  • Interest rates: A hammer blow and the blame lies squarely with the Government

Shell Profits: Sunak has failed to take action with a proper Windfall Tax

Responding the energy giant Shell making record profits of over £68 billion in 2022, Liberal Democrat Leader Ed Davey MP said:

No company should be making these kind of outrageous profits out of Putin’s illegal invasion of Ukra ine.

Rishi Sunak was warned as chancellor and now as Prime Minister that we need a proper windfall tax on companies like Shell and he has failed to take action.

Families across the country are struggling to heat their homes and feed their families and this government turns round and says, there is nothing we can do.

They must tax the oil and gas companies properly and at the very least ensure that energy bills don’t rise yet again in April.

Lib Dem Bill to ban prepayment meters seeks to protect vulnerable from exploitation

A Bill to prevent vulnerable people from exploitation by energy companies will be brought to Parliament tomorrow [3rd February]. The Bill tabled by Liberal Democrat Energy spokesperson Wera Hobhouse MP seeks to halt the installation of prepayments meters until April.

It comes as prepayment meters have been criticised for costing a “poverty premium” to vulnerable people and those already struggling with their energy bills. An investigation by The Times has reported that energy company engineers are ‘forcing themselves into homes’ to install them.

Under the terms of the Bill, energy companies would be prohibited from forcing households into prepayment meters as a result of unpaid bills or debt to providers, at present the Government has only asked them to voluntarily stop installing them.

Commenting on her Bill ahead of tomorrow’s reading, Liberal Democrat Energy Spokesperson, Wera Hobhouse MP, said:

These predatory prepayment schemes cannot go on a moment longer. No one should need to pay a poverty premium because of this Government’s incompetence.

The cost of living crisis this Conservative Government has plummeted us into is already making life more challenging for vulnerable people, retired pensioners and hardworking families. The last thing they need is to have their energy security taken away and replaced with an expensive meter liable to run out at any moment.

Conservative MPs have a choice to make tomorrow, they can back my Bill and keep vulnerable people secure, safe and warm, or they can plunge people further into debt and leave millions wondering how long the heating and lights will last on their limited budget.

Interest rates: A hammer blow and the blame lies squarely with the Government

Responding to the Bank of England raising interest rates, Liberal Democrat Leader Ed Davey said:

This is a hammer blow to hardworking families across the country. Today’s decision to hike mortgage rates has added fuel to the fire of this cost of living crisis.

The blame lies squarely with the Conservative Government whose botched budget last year sent mortgage rates spiralling. Their complete failure to get inflation down has led to homeowners paying the price.

Since Rishi Sunak became Prime Minister, the typical homeowner is paying £822 more in mortgage interest payments. He has done nothing to help families with this. It is time he stepped in and introduced an emergency mortgage protection fund to stop people losing their homes.

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  • Mel Borthwaite 3rd Feb '23 - 7:17am

    Strange figures in this article – Shell made profits of £32.2 billion in 2022 (and not the £68 billion quoted).
    Worth pointing out that only 5% of Shell’s profits were made in the UK so even if every penny of profit in the UK was taken off them in tax, 95% of these profits would be untouched.

  • Christopher Haigh 3rd Feb '23 - 10:47am

    Mel Braithwaite – Shell reported profits of £68 billion. Analysts somehow adjust this figure for taxation and accounting comparability with other companies e.g. for stock valuation, goodwill right off, and whatever and come up with the £32.9 billion figure.

  • Jenny Barnes 3rd Feb '23 - 10:50am

    “The Bill … seeks to halt the installation of prepayments meters until April.”
    It’s not very ambitious, is it. So nothing about existing pp meters, and they can fill their boots installing them come April.
    It would be much better to reform the market.
    First, introduce a reduced rate amount of gas and electricity for up to 50% of normal usage. The average is 2.9 MWh of electricity and 12 MWh gas per year. So the first 1.5MWh of electricity and 6 MWh of gas would be on a fixed social tariff for all. Say 12.5p KWh for electric and 5p for gas. Standing charges would be abolished, as they can mean a pp customer can money in their meter and get not much back, having been unable to afford any energy for a while. The social gas quantity would need to be seasonally adjusted, as obviously more gets used in the winter. Those using over the social tariff amount would pay the full commercial cost, whatever that happens to be, plus the standing charge suitably spread across each unit. Whether the subsidy for the social tariff comes from the taxpayer or the energy companies is an interesting question. And existing debt recovery would be separated from charging for current usage. It’s clear that energy prices are going to stay much higher than we have been used to for the foreseeable future, so we need a longer term solution than price caps and subsidies.

  • @Mel. My profound thanks for pointing out that the vast majority of this £32m profit is made outside the UK and is therefore beyond the grasp of the tax man, Keir Starmer, Ed Davey and every one else eying it up. Why do politicians, journalists and commentators find this point so hard to grasp ?
    Secondly, for those interested in accounting practice, this £68m figure quoted is EBITD. that is, before interest, tax and depreciation. This is not some kind of tax fiddle or accountants slight of hand, but recognition that businesses have to pay their taxes and they need to make provision for the replacement of capital items in the future. £68m may be the trading profit, but £32m is all that is left to reinvest in the business, give to shareholders, or indeed hand over to Ed/Keir/Rishi.

  • Sorry, in previous post m should have read bn. Obviously !

  • Helen Dudden 3rd Feb '23 - 7:42pm

    Is this progress to saving the planet?

    It does not make sense that vast profits are made by utilities and are they invested in future energy productivity.

    If anyone dies of cold and hunger, is that the price to be paid?

  • George Thomas 4th Feb '23 - 8:31am

    “The blame lies squarely with the Conservative Government whose botched budget last year sent mortgage rates spiralling.”

    Economy has been made weaker over more than a decade before botched budget and global factors highlighted how weak we had become. It’s so hard to vote LD’s if the viewpoint on economy is that everything was perfect until Liz Truss and then it went to pot.

  • Considering those that are on a pre-payment meter have the most expensive energy costs . April seems completely inadequate as regards a set date ..
    Surely we should be looking at an 18 month + ban .
    And those meters should only be fitted as a last resort – with an exemption for vulnerable tenants..

  • Good comment from Jenny on potential market reforms. The BBC report on Shell’s profits make some salient points https://www.bbc.co.uk/news/uk-64489147
    “Shell had paid $13bn in taxes globally in 2022.”

    “The government’s windfall tax only applies to profits made from extracting UK oil and gas. The rate was originally set at 25%, but has now been increased to 35%.

    Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate. Along with the new windfall tax, that takes their total tax rate to 75%.

    However, companies are able to reduce the amount of tax they pay by factoring in losses or spending on things like decommissioning North Sea oil platforms. It has meant that in recent years, energy giants such as BP and Shell have paid little or no tax in the UK.”

    Shell’s super-profits arise from what are termed economic rents. This article https://www.taxpolicy.org.uk/2023/02/02/shell/
    qrited “Shell’s profits aren’t just normal profits – they’re “economic rent”. Shell is – by pure accident – making a return which doesn’t just exceed its costs, but exceeds the normal return it would expect for the risks that it runs. In other words: a “windfall”.

    Standard economics and tax policy says we absolutely *should* tax economic rents that arise by accident. And because those profits arise by accident, that shouldn’t deter investment, or create economic distortions.”

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