Energy companies are bleeding British families dry. Here’s how to fix it | Owen Jones

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Britain’s households are reduced to cash machines for the shareholders of the energy giants. For any future historian seeking to understand just how broken Britain’s economic model of the 2020s was, the dichotomy of these two statistics needs no further explanation: £6.9 billion in profits for BP – the second highest never recorded – while the average household energy bill is expected to hit over £3,600 a year by winter.

It’s obviously unaffordable for millions of British families, too many of whom are already skipping hot meals to ensure their children are fed, while the only problems shareholders can expect are hangovers. too many champagne dinners.

That the Conservatives were ashamed to impose a windfall tax in May is not an adequate response to an impending human catastrophe. The extra 25% they will pay on profits only applies to three weeks ago, meaning the vast fortunes made before will not be affected. In part, they profit from the war: the horrors of Ukraine and the sanctions against Russia have caused oil and gas prices to soar. The battlefields of armed conflict have often proven to be lucrative business opportunities. That history often repeats this sordid enterprise is none the less grotesque.

Energy companies know that the case for a much more ambitious tax is indisputable, so they resort to desperate manoeuvres. Higher rates will mean the confiscation of money desperately needed for green investments, they cry, jeopardizing the clean energy transition needed to save human civilization from the existential threat of the climate emergency. Don’t believe them.

For starters, despite attempts to ‘green’ their reputation as climate fighters, the world’s biggest oil and gas companies are spending over £150m a year to pressure politicians to shut down, weaken or destroy the policies needed to tackle the climate crisis. That high energy that has thrown £1million at the Tories since the last election is not some fanciful splash of cash: it’s because they trust the Tories most to forestall demands for tougher measures at against them. It wasn’t naive: look at the 90% tax breaks – for investing in fossil fuel extraction – that Rishi Sunak gave them, allowing them to drastically reduce their tax bills.

In any case, the killer fact is that 60% of their profits go directly to shareholders: none of this funds investments in anything, let alone clean energy. Since 2010 they have distributed almost £200bn to shareholders: imagine how that money could have been used instead to promote clean energy, as well as to reduce household bills. “They don’t use money to invest – and when they do invest, it’s always fossil fuel heavy,” says Mathew Lawrence, director of the Common Wealth think tank. “It is better not to see them as energy companies but as institutions whose main objective is to manage cash flow to reward investors.”

But not every year brings such profits, energy companies say: what about lean times? Even then, if you average the years, the great energy is flooded with money. Their apologists’ opposition to a sweeping tax is growing increasingly desperate: like claiming it will hammer home pensioners, a point largely refuted by Common Wealth research which points out that major pension funds hold less than 0.2 % of BP and Shell shares. And would anyone consider Norway – which enjoys one of the highest living standards on Earth – to be financially imprudent. Yet its permanent windfall tax – worth 56% on top of corporation tax – means that for every £100 they collect from barrels of oil in the North Sea, the Great -Brittany receives only £8.

Although being forced by popular pressure to impose a more drastic tax on energy companies is the maximum we can expect under the Tory, that does not mean it should be the limit of Labor ambitions. When Keir Starmer was asked on national television during the 2020 Labor leadership race if he supported the renationalisation of energy, he raised his hand, only to later return to that promise, as well as to so many other commitments of his campaign. But taxes only offer a temporary fix, rather than tending to a structurally broken industry that should never have been abandoned by the government to profiteers. How come Britain is one of only two European countries to have fully depleted its transmission grid, for example, with National Grid wasting £1.4 billion in shareholder dividends just by 2021, instead of using it to invest?

French President Emmanuel Macron can hardly be construed as a leftist brandon, yet his government is taking full control of the already largely nationalized energy company EDF. Because it is state-owned, the government could simply order the company to take a £7billion hit to protect families from a cost-of-living crisis by limiting bill hikes to just 4% this year. As pro-public ownership organization We Own It points out, academic research indicates that energy prices are up to 30% lower under public ownership – here’s an obviously viable long-term solution.

A social order that deprives struggling households to pay astronomical dividends into the bank accounts of wealthy shareholders is broken beyond repair. Conservative leader Liz Truss’ position is to call out the failing economic orthodoxies that have prevailed for years, concluding that the problem is that taxes are too high for big business – rather than, say, energy companies bleeding dry British families. His blind refusal to recognize reality speaks to a political party inhabiting a parallel universe. Britain’s energy industry should never have been reduced to a cash cow for profiteers. At the very least, our frontline politicians should be ashamed of themselves for plundering these super-profits to offer their citizens a life raft. As it is, they were left to drown.

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