Rishi Sunak has been urged to close the holes in his “Swiss cheese” of a windfall tax on energy companies after Shell and British Gas reported significant profits, with Labour calling the government’s stance “perverse”.
Billions of pounds will go to shareholders instead of being recouped in tax and put towards more help for those struggling to pay their bills, according to Ed Miliband, the shadow net zero secretary.
He accused ministers of not being committed to the “green sprint” and said Labour would tackle the cost of living and climate crises simultaneously.
The attack on Sunak’s windfall tax came as Miliband acknowledged that the expansion of the clean air zone across London in part cost Labour the chance of winning the Uxbridge and South Ruislip byelection last week.
The move was a concern of voters, he admitted, adding there should be “more help” for those who would be affected across Greater London.
Labour and the Conservatives’ commitment to net zero has come under scrutiny in recent weeks. Reports of Shell and British Gas’s profits in the first six months of 2023 has reignited the debate over how politicians balance the cost of pursuing the target with keeping voters onside.
British Gas reported its highest-ever first-half profits, of almost £1bn, while Shell has reported profits of just over $5bn (£3.9bn) for the second quarter of the year.
Miliband said Sunak had been “dragged kicking and screaming” to implement a windfall tax on oil and gas firms. The existing policy was like a “Swiss cheese” and “full of holes”, the Labour frontbencher claimed.
He called for the current rate, 75% of profits, to be upped to 78%, and criticised the so-called super-deduction that allows companies to reduce their payment if they invest in British energy projects, saying Labour would close the “loophole”.
“These are unearned, unexpected profits,” Miliband told BBC Breakfast “This is because Russia launched an appalling invasion of Ukraine and drove gas prices up.
“The only long-term answer is to move off fossil fuels as quickly as we can because even though we imported very small amounts from Russia before the war, we’ve been so badly affected as a country.
“That’s why the drive to increase onshore wind, solar energy, offshore wind – cheaper than fossil fuels – is the right answer for the country. And my regret is not just that we don’t have a proper windfall tax, it’s that we don’t have a government committed to that green sprint either.”
Under a Labour government, Miliband said the “north star” of its energy plans would be a drive to ensure all electricity comes from zero-carbon sources by 2030, which he added would cut bills across the economy by £93bn.
skip past newsletter promotion
Sign up to First Edition
Free daily newsletter
Our morning email breaks down the key stories of the day, telling you what’s happening and why it matters
Enter your email address Enter your email address Sign upPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.
after newsletter promotion
After last week’s loss to the Tories by 495 votes in Uxbridge and South Ruislip, Miliband conceded the extension of the ultra-low emissions zone (Ulez) was “definitely a concern of voters”.
“We’ve got to tackle the cost of living crisis and the climate crisis together,” he said. “You can have both.”
Miliband said the London mayor, Sadiq Khan, had been urged to offer “more help” to those affected and was “reflecting on those deep concerns” raised by voters last Thursday.
He added: “There is an answer for our society, which is green energy is often cheaper. Where there are costs, we don’t leave people to shoulder them alone.”
When Miliband was challenged over Labour having delayed its plans for £28bn a year of spending on green jobs and industry, he stressed it was important for the party to “meet our fiscal rules”.
Dismissing any suggestion he was at loggerheads with the Labour leader, Keir Starmer, or the shadow chancellor, Rachel Reeves, Miliband praised them both and said: “We are absolutely united on this.”
