Energy giants raking in £60 million a day profits as Tories fail on windfall tax

01 May 2023 , 21:30

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Energy giants are expected to announce bumper profits this week (Image: Hazel Falck)

Energy giants are raking in an estimated £60 million a DAY following Tory failure to bring in a proper windfall tax, new figures show.

Firms including BP and Shell are this week expected to announce profits of around £7 billion since the start of the year.

The Government has been accused of giving these companies “generous and untargeted handouts” by Labour as millions struggle through the cost of living crisis.

Rishi Sunak faces fresh calls to follow Norway's lead and hit the companies with taxes of 78% on their unexpected profits fuelled by huge price increases last year.

Today, BP is expected to announce it has made a profit of around £3.4 billion in the first three months of 2023.

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Shell meanwhile is expected to announce it has made around £7 billion since the start of January.

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Shell will announce its figures on Thursday, figures from the Office for Budget Responsibility (OBR) suggest £60 million of profit is reported in the North Sea every day.

Ed Miliband, shadow energy secretary, said: “While families face the crunch from soaring bills, these new figures confirm yet again that the Conservatives are refusing to do the fair and right thing and bring in a proper Windfall Tax on Oil and Gas giants to help freeze council tax this year.

"That’s the choice Labour would make ahead of these local elections, because we are on the side of working people.”

Labour claims a windfall tax on profits since last year will raise more than £10 billion for the Treasury in the next two years.

Norway hit energy firms with a 78% tax on their eye-watering profits last year.

Under its energy profits levy, the Government ordered companies to pay 35% on the energy profit levy for firms which extract oil and gas in the British areas of the North Sea.

Ed Miliband accused the Tories of failing to do the 'fair and right thing' (Getty Images)

But this can be reduced if these firms invest in new production - a loophole which Labour warns has saved companies billions - often because of work they planned to do anyway.

Labour has pledged to close the loophole and backdate extra taxes to January last year.

This would raise an estimated £10.4 billion, some of which would be used to freeze council tax at a cost of £2.7 billion, it said.

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Shares in Shell are so far up around 1.5% this year, while BP has risen around 8.5%.

The Liberal Democrats last week demanded ministers bring in a tougher windfall tax and scrap loopholes.

The “investment allowance” allows oil and gas companies to offset taxes against new investment in fossil fuel extraction.

Official figures show the levy brought in £4.4billion in the past year, way below the £7.2billion the government had forecast.

The Energy Profits Levy was introduced in May last year as prices soared following the Russian invasion of Ukraine.

The 25% tax was applied to profits made from extracting UK oil and gas, but not from other activities such as refining oil and selling petrol and diesel at forecourts.

In the Autumn Statement in November, Chancellor Jeremy Hunt announced the rate would be increased to 35% from January with the levy extended until March 2028.

Dave Burke