Lib Dems demand “Robin Hood tax” on oil and gas super-profits
Originally published by Folkestone and Hythe Liberal Democrats
Liberal Democrat Leader and former Energy Secretary Ed Davey has called for a "Robin Hood" tax on the super-profits of oil and gas firms to raise money to support millions of families facing soaring energy costs.
The proposed one-off levy would raise an estimated £5 billion from companies that are making record profits from soaring energy prices. This would be used to support vulnerable families facing a crippling 50% increase to their energy bills.
Earlier this week it emerged that Russian energy giant Gazprom's trading arm, based in London, has cashed in a £179 million dividend. Meanwhile, the boss of BP has described his company as a 'cash machine' after soaring oil and gas prices boosted its profits to £2.4 billion in the third quarter of 2021 alone.
Ed Davey, who as Energy Secretary developed a strategy to tackle fuel poverty, says the money raised through this "one-off" tax could fund a substantial package of emergency support to help over 17 million people with their heating bills.
The current Warm Homes Discount would be more than doubled to £300 and offered to all 7.5 million vulnerable and low-income households on Pension Credit and Universal Credit. The Winter Fuel Allowance offered to pensioners would also be doubled to £600 for one year. This would support 11.3 million elderly people who are seeing their state pensions slashed in real terms by the government's broken election promise on the triple lock.
Liberal Democrat Leader Ed Davey said:
"It can't be right that a few energy fat cats are raking it in from record gas prices while millions of people can't even afford to heat their homes.
"A Robin Hood tax on gas and oil barons would provide vital cash to support vulnerable families facing crippling energy price hikes.
"For years the Conservatives have ignored this problem and failed to take the bold action we need to reduce fuel poverty. Boris Johnson cannot look the other way any longer while families face an impossible choice between heating and eating.
"We need a substantial package of support now that provides immediate support to those struggling to get by, while helping people insulate their homes to slash heating bills in the long term."
The proposed windfall tax would be a one-off levy on firms who have made huge profits from record high gas prices. This would include oil and gas producers along with energy traders such as Gazprom's trading arm that profit from betting on fluctuations in energy prices. The levy would raise an estimated £5 billion to £7 billion. This would be spent on:
- Doubling and extending the Warm Homes Discount (£2bn): Taking £300 a year off the heating bills of around 7.5 million vulnerable and low income households, by more than doubling the Warm Homes Discount and extending it to all those on Universal Credit and Pension Credit. This would also reduce energy bills for all households across the country, as currently the Warm Homes Discount is paid for by other customers rather than through taxing the super-profits of oil and gas companies
- Doubling the Winter Fuel Allowance (£1.9bn): Giving up to £600 a year to 11.3 million elderly pensioners to help with their heating bills, through a one-off doubling of the Winter Fuel Allowance. Pensioners are currently facing a £208 real-terms cut to the state pension next year due to the Conservative government's decision to scrap the triple lock. This would cost an estimated £1.9 billion.
- A new ten-year home insulation scheme (£500m): This would be spent on reducing people's energy bills in the long-term through an emergency home insulation programme to upgrade poorly insulated UK homes - including through fully funded grants for those in fuel poverty and on low incomes. This would cost an estimated £500 million in the next year.
- Supporting energy intensive businesses (£500m): This funding would be used to support businesses and protect jobs in energy-intensive industries, while helping firms reduce their need for energy in the long-term.
As Secretary of State for Energy and Climate Change Ed Davey oversaw a reduction in fuel poverty with over 1.8 million heating and energy efficiency measures for low income areas and households, and minimum energy efficiency standards introduced for the private rented sector. He launched a fuel poverty strategy for England in 2015 including new fuel poverty reduction targets, and oversaw the near quadrupling of the UK's renewable energy capacity, reducing the country's reliance on overseas gas.
Since 2015 the Conservatives have scrapped zero carbon standards for new homes, effectively banned onshore wind while slashing subsidies for solar, and failed to insulate the millions of energy efficient homes.