Richard Burgon
Main Page: Richard Burgon (Labour - Leeds East)Department Debates - View all Richard Burgon's debates with the HM Treasury
Cost of Living: Fiscal Approach
Richard Burgon Excerpts(1 year, 11 months ago)
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Richard Burgon (Leeds East) (Lab)
Today, I want to make a proposal. We have heard a lot recently about a windfall tax. We have even heard that the Prime Minister might be about to U-turn and deliver one. To make a real difference to people’s lives, it must raise serious funds, so today I call for £10 billion to be raised via a windfall tax on North sea oil and gas giants to help deal with the cost of living emergency.
Let us be clear: people’s bills are so high because North sea oil and gas companies are making vast excess profits. Those excess profits are not the result of innovation or extra investments; they are an undeserved and unexpected windfall that has come about simply because oil and gas prices have spiked as a result of the horrific war in Ukraine.
We have a choice. Either oil and gas companies continue to make eye-watering levels of excess profits or we use a windfall tax to help people through this crisis. Using figures from the Office for Budget Responsibility, we can estimate that North sea oil and gas companies will make post-tax profits of £15 billion in the financial years 2021-22 and 2022-23, which is almost £13 billion more than they would have made based on their average annual post-tax profits in the three years before 2020-21, when oil and gas prices started to increase. I therefore think it perfectly reasonable for £10 billion of that £13 billion to go to the taxpayer.
Before we hear the claim that such a tax would undermine investments, let us remember that BP has even admitted that a windfall tax would not affect its planned investments. Of course, some in the Conservative party who put profit before people may scream and shout about such a plan. However, the truth is that this is an emergency that people are living through, and in that context we need emergency measures.
Of course, the level of windfall tax that I propose will not be enough by itself. We will need windfall taxes on the wider energy sector and across other sectors that are making excess profits. We will need price caps on key essentials and we will need wealth taxes. However, a windfall tax to raise £10 billion will make a real difference to people’s lives, and we should get on with delivering it. The Government can and should do it. It is necessary and it is the right thing to do. They should get on with it now.