UK gas producers and electricity generators may make excess profits totaling as much as £170 billion ($199 billion) over the next two years, according to Treasury estimates that lay bare the revenue-raising potential of a windfall tax.
Treasury officials will deliver the assessment to the next prime minister when they take office on Sept. 6, according to a person familiar with the matter, who asked not to be identified discussing internal calculations.
The prediction is likely to fuel further calls for increasing the existing windfall tax on oil and gas production in the UK, and extending it to power generators that have so far been exempt. Tax at the current windfall rate of 25% could generate tens of billions of pounds if the excess profits for 2023 and 2024 come in at the top of the Treasury forecast.
Excess profits are defined by the Treasury as the difference between the profits energy producers are predicted to make in the future, and the profits they could have expected to make based on the outlook for prices before Russia’s invasion of Ukraine. The Treasury declined to comment on the specific forecast, while reiterating that it expects an already-introduced windfall tax on oil and gas producers to raise £5 billion in its first year.
With domestic winter energy bills set to rocket to triple the level they were last year, any further tax revenue could help fund a government support package to help struggling Britons. Both Liz Truss — the favorite to succeed Boris Johnson as prime minister next week — and her rival, Rishi Sunak, have pledged to step up support, though neither has detailed exactly how much.
Truss has repeatedly said she is opposed to windfall taxes, arguing that they “send the wrong message to investors.” She’s also so far refused to set out how she would help families and businesses struggling with soaring energy costs, arguing that she needs to see figures from the Treasury once she takes office before she can make any final decision.
Kwasi Kwarteng, who is strongly tipped to be Truss’s Chancellor of the Exchequer, has also signaled his opposition, even after the government he served in announced one earlier this year. “I have always been opposed to such taxes on principle, and I continue to be opposed,” he told the House of Commons in June.
Sunak, by contrast, announced the current windfall tax in May when he was still chancellor, and has since suggested he would seek to raise more from the levy on energy companies.
The new tax, known as the energy profits levy, is an additional 25% tax on top of existing taxes on oil and gas producers. Legislation passed in July allows the tax to run until the end of 2025. However, it also allows firms to drastically lower the hit they face by investing more money in oil and gas production that could help increase energy supply.
Shell Plc has posted record profits, while Centrica Plc’s surging revenue allowed it to resume paying a dividend to investors for the first time since before the Covid-19 pandemic.
The government considered and rejected extending the windfall tax to electricity generators profiting because rising gas prices have also pushed up the price of power those generators can charge. Some of those companies have reported rising profits even in cases where they have produced less energy.
The Treasury analysis suggests about two fifths of the £170 billion in excess profits would be attributable to power producers, suggesting extension of the windfall tax could be lucrative for the government coffers. But opponents of the tax say it could deter some investment in the UK’s renewable energy sector.
Evil, and I don’t think that’s hyperbole.
Then there will be a ray of sunshine turning up here soon and excusing all of this by saying that all of this inevitable due to the war in Ukraine and Putin and China and whatever and whoever else.
While we all starve and freeze.
Can someone explain to me why they are doing so well? I’d have assumed if there are factors driving up prices like ukraine then they;d make less
And it’ll supposedly cost £100bn to give people the support they need. Do the maths.
If they’re doing do well, why are they squeezing us dry?
When will we say enough is enough?
170 billion…
And labour only wants 30 billion of that to try and get the UK out this death spiral….
I really hope they get what’s coming to them
£170 Billion is about £2500 per person in the UK.
Tax it at 99%.
But they have no choice but to increase the prices guys. Their hands are tied. They’d make things easier for us if they could.
Nationalise them. Nationalise the profits for us, the people.
Great news, I can’t wait for that to trickle down. Any day now…
I’d love someone to put 170 billion into perspective….somehow
It might be somewhat forgivable if all that money was used to switch them to renewables but its all going to shareholders and they couldn’t give a shit about the climate…just seems really dumb when they could use the money to be a leader in green energy
This is what the energy firms have been waiting for…..cunts.
Blows my mind how the government haven’t figured out they could be making this cash if they had a single ounce of logic between them.
Should set the price cap to £600/yr
My electricity is claimed to be green from renewable sources so why Is it double the price of gas . If it’s not produced by using gas it should be half the price of gas
My electricity is claimed to be green from renewable sources so why Is it double the price of gas . If it’s not produced by using gas it should be half the price of gas
It’s insane. People are literally considering taking their lives because they can’t afford basic necessities. They are actively killing the population and they don’t care one bit.
What can they actually do with all that money anyway. Absolutely no moral compass. Imagine a tribe where one person had way more of something than they could ever use and the rest were starving. How long do you think it would be until the commodities were taken by force and redistributed? It’s human fucking nature.
And the estimated cost to the government for fixing the energy cap at April’s rates is £100 billion – seems like they could windfall tax and pay for the cap freeze in it’s entirety!
Should be taxed at 100%. People are going to die this winter. The shareholders of these companies will have blood on their hands.
£4250 per British household… give or take
But it’s absolutely definitely nothing to do with them raising the prices so high, oh no siree. Bastards.
Well, as long as those guys are ok. I mean, I was worried there for a second that my freezing to death soon wouldnt have any up sides….
Pitchforks and Torches!
Windfall tax of 196bn screw then over like they screwed us over
170B profit? Are they taking the fucking piss out of the public? Cos I really think they are doing exactly that.
Cool. That’s at least £169bn in tax the government can take to give us a discount. £1bn of unexpected profits seems enough for anyone.
Yea no shit,
the Increase in energy costs seems so artificial like they need it to cost more intime for when electric cars take over in a few years. So those currently dealing in oil don’t lose out when we stop using it as a fuel source.
After the implementation of so many electric generators across england, somehow electric is costing more rather than less. It’s actually quite insulting. Installing solar farm, hydro generators, wind turbines everywhere and as the cost for generating electric reduces, the cost rises for us to use it and their profit margines are much larger.
Now if we could get planning permission to have our own electric generators they’d be shitting their pants but they wont let us so we don’t have a choice. Bastards
The usual answer on this site is, it’s because of Brexit
33 comments
UK gas producers and electricity generators may make excess profits totaling as much as £170 billion ($199 billion) over the next two years, according to Treasury estimates that lay bare the revenue-raising potential of a windfall tax.
Treasury officials will deliver the assessment to the next prime minister when they take office on Sept. 6, according to a person familiar with the matter, who asked not to be identified discussing internal calculations.
The prediction is likely to fuel further calls for increasing the existing windfall tax on oil and gas production in the UK, and extending it to power generators that have so far been exempt. Tax at the current windfall rate of 25% could generate tens of billions of pounds if the excess profits for 2023 and 2024 come in at the top of the Treasury forecast.
Excess profits are defined by the Treasury as the difference between the profits energy producers are predicted to make in the future, and the profits they could have expected to make based on the outlook for prices before Russia’s invasion of Ukraine. The Treasury declined to comment on the specific forecast, while reiterating that it expects an already-introduced windfall tax on oil and gas producers to raise £5 billion in its first year.
With domestic winter energy bills set to rocket to triple the level they were last year, any further tax revenue could help fund a government support package to help struggling Britons. Both Liz Truss — the favorite to succeed Boris Johnson as prime minister next week — and her rival, Rishi Sunak, have pledged to step up support, though neither has detailed exactly how much.
Truss has repeatedly said she is opposed to windfall taxes, arguing that they “send the wrong message to investors.” She’s also so far refused to set out how she would help families and businesses struggling with soaring energy costs, arguing that she needs to see figures from the Treasury once she takes office before she can make any final decision.
Kwasi Kwarteng, who is strongly tipped to be Truss’s Chancellor of the Exchequer, has also signaled his opposition, even after the government he served in announced one earlier this year. “I have always been opposed to such taxes on principle, and I continue to be opposed,” he told the House of Commons in June.
Sunak, by contrast, announced the current windfall tax in May when he was still chancellor, and has since suggested he would seek to raise more from the levy on energy companies.
The new tax, known as the energy profits levy, is an additional 25% tax on top of existing taxes on oil and gas producers. Legislation passed in July allows the tax to run until the end of 2025. However, it also allows firms to drastically lower the hit they face by investing more money in oil and gas production that could help increase energy supply.
Shell Plc has posted record profits, while Centrica Plc’s surging revenue allowed it to resume paying a dividend to investors for the first time since before the Covid-19 pandemic.
The government considered and rejected extending the windfall tax to electricity generators profiting because rising gas prices have also pushed up the price of power those generators can charge. Some of those companies have reported rising profits even in cases where they have produced less energy.
The Treasury analysis suggests about two fifths of the £170 billion in excess profits would be attributable to power producers, suggesting extension of the windfall tax could be lucrative for the government coffers. But opponents of the tax say it could deter some investment in the UK’s renewable energy sector.
Evil, and I don’t think that’s hyperbole.
Then there will be a ray of sunshine turning up here soon and excusing all of this by saying that all of this inevitable due to the war in Ukraine and Putin and China and whatever and whoever else.
While we all starve and freeze.
Can someone explain to me why they are doing so well? I’d have assumed if there are factors driving up prices like ukraine then they;d make less
And it’ll supposedly cost £100bn to give people the support they need. Do the maths.
If they’re doing do well, why are they squeezing us dry?
When will we say enough is enough?
170 billion…
And labour only wants 30 billion of that to try and get the UK out this death spiral….
I really hope they get what’s coming to them
£170 Billion is about £2500 per person in the UK.
Tax it at 99%.
But they have no choice but to increase the prices guys. Their hands are tied. They’d make things easier for us if they could.
Nationalise them. Nationalise the profits for us, the people.
Great news, I can’t wait for that to trickle down. Any day now…
I’d love someone to put 170 billion into perspective….somehow
It might be somewhat forgivable if all that money was used to switch them to renewables but its all going to shareholders and they couldn’t give a shit about the climate…just seems really dumb when they could use the money to be a leader in green energy
This is what the energy firms have been waiting for…..cunts.
Blows my mind how the government haven’t figured out they could be making this cash if they had a single ounce of logic between them.
Should set the price cap to £600/yr
My electricity is claimed to be green from renewable sources so why Is it double the price of gas . If it’s not produced by using gas it should be half the price of gas
My electricity is claimed to be green from renewable sources so why Is it double the price of gas . If it’s not produced by using gas it should be half the price of gas
It’s insane. People are literally considering taking their lives because they can’t afford basic necessities. They are actively killing the population and they don’t care one bit.
What can they actually do with all that money anyway. Absolutely no moral compass. Imagine a tribe where one person had way more of something than they could ever use and the rest were starving. How long do you think it would be until the commodities were taken by force and redistributed? It’s human fucking nature.
And the estimated cost to the government for fixing the energy cap at April’s rates is £100 billion – seems like they could windfall tax and pay for the cap freeze in it’s entirety!
Should be taxed at 100%. People are going to die this winter. The shareholders of these companies will have blood on their hands.
£4250 per British household… give or take
But it’s absolutely definitely nothing to do with them raising the prices so high, oh no siree. Bastards.
Well, as long as those guys are ok. I mean, I was worried there for a second that my freezing to death soon wouldnt have any up sides….
Pitchforks and Torches!
Windfall tax of 196bn screw then over like they screwed us over
170B profit? Are they taking the fucking piss out of the public? Cos I really think they are doing exactly that.
Cool. That’s at least £169bn in tax the government can take to give us a discount. £1bn of unexpected profits seems enough for anyone.
Yea no shit,
the Increase in energy costs seems so artificial like they need it to cost more intime for when electric cars take over in a few years. So those currently dealing in oil don’t lose out when we stop using it as a fuel source.
After the implementation of so many electric generators across england, somehow electric is costing more rather than less. It’s actually quite insulting. Installing solar farm, hydro generators, wind turbines everywhere and as the cost for generating electric reduces, the cost rises for us to use it and their profit margines are much larger.
Now if we could get planning permission to have our own electric generators they’d be shitting their pants but they wont let us so we don’t have a choice. Bastards
The usual answer on this site is, it’s because of Brexit