Windfall taxes make the things taxed dearer. They reduce investment and output in the items taxed, cutting supply.
We were told that the very high prices of gas and oil that resulted from Putin’s invasion of Ukraine and from the West’s decision to stop buying Russian energy were generating windfall profits, both by the fossil fuel companies and by the renewable generators whose prices of electricity reflected the gas price. Gas remains the largest fuel source used in UK generation.
It is true there were such windfall profits as the gas price soared. Today the wholesale gas price is 85% lower than the peak it reached at the worst point after the outbreak of war. The oil price is also down by a third from Ukraine highs. If you impose a windfall tax based on a one off shift in prices that gives companies a bonus, shouldn’t you remove the tax when that price change disappears? It was a weakness of the windfall tax that it did not describe theĀ nature of the windfall or seek to fairly reflect its size and duration going forward.
Few will be sympathetic to large energy companies who have recently been making large profits. However, if the UK perseveres with a level of taxation that is materially higher than elsewhere for energy, and demonstrates an unwillingness to remove windfall taxes after the windfall has gone, we will find it more difficult to attract the investment and jobs we need to produce more domestic energy. Customers end up paying the higher taxes and business will migrate to lower taxed countries.
April 2, 2023
Windfall taxes are very counter productive and prevent re investment by the companies in future projects and more importantly in its workforce.
The vast majority of the major energy companies are foreigner owned and controlled so it understandable they have split loyalties.
The government could write in clauses that companies reinvesting in our country with new projects and state of the art training facilities for the new generation of engineers and R&D in the UK will not attract windfall taxation
We never seem to hear about windfall taxes on the companies paid millions due to Covid? Does the same criteria not apply to them as the energy producers?
April 2, 2023
Indeed, the ultimate windfall there in Covid PPE etc. All the Track and Trace, windfalls.
Nobody wants to grass on mates though, do they?
April 2, 2023
Covid riches were often the result of croneyism. So it would now be embarrassing for the government to draw more attention to them.
Government incompetence was another cause, the same reasons to ignore these windfalls applies.
The government are not working for voters anyway.
April 2, 2023
Vast profits are made by off shore windfarms that are the result of all the subsidies and constraint payments they receive from the UK energy customers bills.
Many on show windfarms are in a similar situation. Add all the other forms of renewables bio mass, bio digesters, solar farms and that is billions paid out to the companies and their shareholders but where are the thousands of jobs that were promised when the snake oil salesperson were convincing the politicians to push their schemes? Many windarms were constructed be foreign companies and their work force.
Why does it seem government’s will persist in shooting themselves in the feet.
As with some major housing projects.
What gets proposed at the planning approval stage in community benefits more often than not gets watered down by the time the project is completed.
April 2, 2023
Show should read shore. But thinking about the vast amount of time they are idle maybe they are show farms? Highlighting the stupidity of the government and devolved parliament who could have got many real extras for the benefit of the people.
April 2, 2023
All the prospecting companies in the North Sea have reduced or stopped investing.
Rolls Royce have stopped recruiting for their SMR programme because the government wants to go to international tender.
No other country would be so stupid as those in Westminster.
I despair
Talk about an own goal.
April 2, 2023
Couple of points here. First, the UK government appears to be the customer of these SMR’s. Why? and we all know what happens when a government/state owned company is the buyer.
Second. Single bidder. How will that be controlled? Do we have competence in Whitehall to assess and control costs on such a project?
This should be left to the private sector. RR could enter into a JV with the energy supply companies and compete on price of power to the consumer.
April 2, 2023
@Peter Woods; “First, the UK government appears to be the customer [..//..] Second. Single bidder. How will that be controlled? Do we have competence in Whitehall to assess and control costs on such a project?”
You point being what, given the critical importance of energy, and given the almost total incompetence shown by the private energy sector since privatization … on the logic used in your argument what next, a private armies, privatize the MOD, the Police…
April 2, 2023
@Ian Wragg; Yes, and some people have been saying very similar things for the last 43 years!
April 2, 2023
Ian wragg
+1 very much agree.
April 2, 2023
Ian
+1
We started to become a self harming nation years ago with stupid idea’s, policies, regulations and purchasing decisions, our Government now seems to be in the grip of a pandemic of stupid thoughts and ideas, which lack any sort of common-sense, and an understanding of human nature
April 2, 2023
Ian,
RR will I hope concentrate their efforts on exporting the technology. Learn from history, when London centric government decides to involve itself in private enterprise it is terminal. I only mention London because for Wales and Scotland this level of cockup is outside their pay grade.
April 2, 2023
@Agricola: Don’t be ridiculous. No foreign government is going to buy the RR SMRs (or anything else from this country) if they do not see the British government buy it first. You need to have a strong home market in order to provide both the confidence that foreign buyers seek and also to have the product in production so that the costs are reduced. That’s how US companies become globally successful. First they sell to their home market and then they are big and successful and can export. But we are governed by morons and traitors who refuse to buy British and refuse to support British companies and refuse to help create a successful British industry. That’s why I despise them.
April 2, 2023
Yes, we have a government that is both treacherous and cretinous. Sir john Tweeted the other day: “Good news the government is getting on with approving smaller nuclear reactors”, but this is NOT “good news” at all since the government is NOT supporting our own, BRITISH company (Rolls Royce), but is opening up the market to foreign companies which will destroy any hope of creating a British global champion, advancing the technology here in Britain and creating jobs and profits and exports. This is the WORST government we have ever had. I am so sick of them. They seem to be determined to do everything wrong and harm Britain as much as they possibly can. They could not make worse decisions if they actively tried to do so!!
April 2, 2023
The government has no plans either to invest the UK’s human capital with saleable high value skills or to force employers to do so. Therefore it is imported. Cheaper in the short term but crippling in the long term.
April 2, 2023
Peter Gardner
Is it really cheaper in the short term when you take into account the demands made on all our existing services because they are on minimum wage which opens up to a raft of benefits.
April 2, 2023
John, John have you arranged a visit to the Globsl Warming Policy Foundation (GWPF) yet. To understand the upcoming Net Zero economic catastrophe and its utter utter blind stupidity! The science is not difficult; youāll be OK
April 2, 2023
A Toby Young tweet today:- A new law will let staff sue their boss if they overhear customers saying something that offends them. Why is Rishi Sunk presiding over a massive expansion of the Equality Act 2010?
How is an employer supposed to control and be responsible for their customers conversations exactly? In a pub, shop, bus, train, restaurant, theatre, comedy clubā¦ ? If you cannot offend people then free speech is dead. If a restaurant or pub manager or similar told me what I could and could not say I would leave never to return.
April 2, 2023
The aim of Labour and Tory barbarians is to DESTROY ALL FORMS OF SPEECH in all environments. Voters actually put a cross in a box and elect these filthy reprobates into Parliament. Why? MPs and bureaucrats are maliciously destroying our core freedoms with a brazen arrogance not seen for many a century
The Tories are doing Labour’s dirty work for fear of being accused and slandered with the usual ‘ism’. The fascist left aren’t just rubbing our noses in diversity ideology they’re force feeding the nation directly into the stomach
When Labour come to power living in the UK will be akin to the Germany or the Soviet Union.
Tory appeasement is destroying the very soul of our nation
April 2, 2023
Folk are beginning to realise the only hope is Reform.
April 2, 2023
Sir Joe
Iāve noticed that when reading around the reader comments on a variety of platforms.
April 2, 2023
Reform have no money to campaign.
So they have little visibility. Tice is a rather bland leader too.
April 2, 2023
But they will be lucky to win a single seat in Parliament given the system. So not much hope there.
April 2, 2023
Yes but we still have the FPTP corrupt system to stymie any party other than Con/Labour and so it will remain – it suits those parties, never mind democracy or will of the people, we get what we have always had, poor government and low grade MP’s.
April 2, 2023
The people voted in a Referendum to keep first past the post and I expect would do so again if there was another Referendum both because it is simpler and also Britons tend to think all the parties they don’t vote for are pretty much equally bad and they don’t want to bother ranking them into second, third and whatever preference. Anyhow proportional representation doesn’t give real power to the people but to the politicians who negotiate most of their promises away to form a government. What would really give power to the people and what is really needed is an American type primary system whereby the voters for the Party rather than a handful of powerful party organisers decide who will be the nominee of the Party in each area at the election. Then the Reform Party supporters on this site could organise to get people they like chosen as Conservative Party candidates (much like Donald Trump did in America with Republican Party nominations, thereby making the views of Republican Party voters override the Republican Party machine and ‘machine politicians’ who mostly didn’t want to do anything much Republican just as most machine Conservative Party politicians don’t want to do anything much Conservative over here.
April 2, 2023
SJS,
Reports in the Sunday Telegraph suggest that this realisation is begining to take root. Reform has a future, and a growing one.
April 2, 2023
But they will be lucky to win a single seat in Parliament given the system that pertains. What is needed is for the Tory party to kick out the dire Socialist, climate alarmist, EUphile, tax to death candidates and MP they have. Alas that is 90% of them including Suank, Hunt, Hands and most of the Cabinet.
About as much use as a whistle and a torch (that might comes on when in contact with water is in a typical plane crash.
April 2, 2023
Agree DOM
April 2, 2023
Prove it. Was the conversation overheard by another member of staff who wishes to testify. Can the offensive speaker be identified and can they be sued as well?
Let it be known that potential customers may get into trouble if they shop at your place, should their conversation not be squeaky clean.
April 2, 2023
@Gabe; Indeed, and this is not the only idiotic woke law being implemented, the Justice, Education, Transport departments are all out of control.
April 2, 2023
Agree – Iām concerned that this government is producing a great many little, often at first sight insignificant, laws ā¦its death by a thousand cuts, a little tax here a little tax there and today they announced a new law that you have to report child abuse (England only) ā isnāt that self evident to any god fearing law abiding citizen, the honest person doesnāt need that law and a dishonest person doesnāt care a F
April 2, 2023
A business will have to write and publish a new risk-assessment and probably install customer/stall cctv to collect evidence, take advise and have a new clause added to insurance ā¦all extra costs and admin ā¦this government hasnāt a clue ā¦I predict now that every employee that you may have to sack or make redundant will claim this offence against them
Iām fed up with this government
April 2, 2023
Gabe,
It is all part of consocialist collective insanity.
April 2, 2023
Fact check that claim, for pity’s sake.
April 2, 2023
For the benefit of the nation and all its energy users this government should remove the correlation between gas and electricity pricing. When that happens then remove the VAT on fuel pricing.
Or is it all part of the demolition of the country so it can be built up better by the new world order political believers?
April 2, 2023
It can’t remove the VAT on energy because of the NI protocol
If they did, it wouldn’t apply to Northern Ireland as they have to stick to EU VAT rules meaning a minimum of 5% has to be charged.
Our kind host can of course refute this but he won’t
April 2, 2023
Very True
April 2, 2023
The aim appears to be to maintain a highish gas price via the windfall tax in order to increase the profits of Green Energy rather than gas or coal suppliers. If reen suppliers become profitable perhaps the Government would reduce their subsidies?
What is the windfall tax revenue used for?
April 2, 2023
All of the Governments problems can be traced back to their woke ideology and not putting the country first. The underlying evidence for this is the Government are trying to buck the market with a marxist-type ideology. Whether itās green-energy, mass-migration, diversity-targets, virus-controlling-lockdowns, the Government woes all stem from a God complex that they are superior to nature.
April 2, 2023
Yup, we’re on the same path as France, as far as our economy is concerned, just a few years behind. Let’s hope the EU unreality project implodes before we do.
April 2, 2023
+1
April 2, 2023
PW I do hope the EU implodes, but without too much collateral damage to its citizens.
On this note it’s worth looking at Viktor Orban’s speech about the EU on Friday (on his Facebook page, in English).
He said the EU was supposed to deliver peace and prosperity. He then called the EU “a pro-war system of institutions” that were “destroying the EU economy”, adding that “people are questioning the very meaning of the existence of the European Union because it has surrendered the two goals which it is meant to serve.”
No wonder the Europhiles hate him, but it’s how many citizens feel.
April 2, 2023
The question is-where is it all coming from? The sources, wherever they are, are keeping extremely quiet and pushing these idiots from the sidelines.
April 2, 2023
S J S
W E F , UN
April 2, 2023
Talking of windfalls, according to the DT today, the Government are planning to force farmers to feed cows anti-flatulence supplements in their diets to prevent them from expelling methane as a green house gas.
The Government is now a fully immersed citizen in clown world. Honk. Honk.
April 2, 2023
I thought that might be an April Fool’s joke …. but it’s just mad enough for the Blu-Green Socialists to endorse it.
April 2, 2023
Indeed. The government seems that think they know best just how we should all have to do things. Top down socialism. But in reality they are appalling at making such judgements as history shows. Look for example at the way they got almost every single thing wrong with Covid with disastrous consequences for health and the economy. It is now clear from the statistics that the damage done by the net harm experimental vaccines, even to younger people who never remotely needed them, is truly appalling.
As to āWhat is a windfall tax?ā. Well it is just another name for government expropriation or theft really the word windfall is to make it sound more moral and justified a bit like the Climate Alarmist Scam.
April 2, 2023
If you donāt tax a business, that business will flourish ā¦.just look at illegal immigration
April 2, 2023
‘Today the wholesale gas price is 85% lower than the peak it reached at the worst point after the outbreak of war.’ So I’m a little surprised that prices aren’t tumbling. What’s going on?
I don’t favour ‘windfall taxes’ on (risk-taking) oil and gas producers. But I don’t like the idea of Windy Millers hiking up prices to follow gas . Approval to either frack onshore gas or harvest the wind should come with an obligation to supply energy, to the domestic market, below a specified maximum price.
April 2, 2023
Not quite on topic. New NZ targets will require carmakers to ensure 22% of all cars sold by the end of the year are electric or face fines! 80% by 2030.
What exactly will he do about it if we, the motoring public do not wish to buy these useless piles of electronic junk, glorified electric milk carts, environmentally destructive, expensive and impractical ev’s?
Meanwhile, government cannot even put in place an energy strategy that works, is affordable and provides energy security.
April 2, 2023
Communism
April 2, 2023
Anyone teaching economics would hesitate to think that our hostās statement of such a basic economic principle needed to be said. Except that many of the people currently running our government donāt appear to understand it.
April 2, 2023
Good morning.
Greed is at the heart of all this. Greed from the energy industry. Greed from the government. But it is worse from the government as the tax is ideologically driven. It is based on envy made to look like divine retribution which it is not.
The government clearly has too much money. It is busy trying to throttle the economy to control inflation whilst spending on things we do not need goes on.
People voted in 2016 to put their government and elective representatives in charge, and by doing so, hope that through the process of elections we get the government we want. Alas, we have seen that the Establishment have sold us out to the EU and the UN by stealth, handicapping any government that would really want to see change.
Solution. Well it ain’t gonna come by voting for the LibLabCON.
April 2, 2023
Well yes, windfall taxes can reduce R&D or even stifle turnover etc if used ineptly but when that happens it likely tells us more about the govt Minister than it does the principles of the tax its-self.
It is quite possible to impose such taxes in ways that will actually increase investments or encourage lower prices, as companies strive to avoid the tax. It should also be possible to protect pension company incomes derived from dividends, after all windfall taxes are imposed on excess profits, not expected profits, the clue being in the word “windfall”.
April 2, 2023
Problem is that there is no oversight on what government does. When we were in the EU we had to adhere to the European norms of 27 other countries and if was overseen and pointed out if we were out of step but now that we have taken back control we are cut off and government can do or not do as if pleases – our system of government with the race to the bottom between the two main parties will keep us poorer unless we have reform real reform – like first of all we need proportional representation in our general elections – then a fazing our the unelected Lords to be replaced by elected ones but nof for life – ten-years should be enough. We need Reform
Reply The EU did not restrain bad government. It required us to impose bad laws and higher taxes.
April 2, 2023
@James4; Yours is a a manifesto for more wokness, less oversight!
Every parliamentary system using proportional representation has weak ineffective govt, heck the SNP couldn’t even elect a leader of choice last week without fear their coalition partner would not collapse the executive by refusing to appoint a First Minster; whilst an elected upper House would cause stalemate, as the two compete for dominance over the other, both claiming they are the true will of the people – or you get one party controlling both Houses in lock-step, rubber stamping each other, as happens in the USA.
April 2, 2023
But the catch 22 is any new system has to be put in place by the people placed in power by the old system. Turkeys voting for Christmas as they say.
April 2, 2023
Who oversaw the EU government?
April 2, 2023
That’s an easy one ….the UN WEF
April 2, 2023
@glen cullen; Indeed it is easy …to get wrong!
April 2, 2023
@Lynn A; The European Commission is overseen by, and cede to, the ECJ and/or the ECHR, two courts the vast majority on the UK right were happy to also cede to (for one thing the UK helped set up the ECHR) whilst the European Commission and thus European law were at least sympathetic to UK aims.
But as soon as the Commission went off message though, that’s when the troubles started, hence Mrs Thatchers remarks within her Bruges speech; “We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels”. A speech made a week or so after Delors had made his own speech to the 1988 TUC conference, affirming any future EU would protect the traditional rights of Trade Unionists and their members.
April 2, 2023
The European Union’s Parliament, Council of state leaders, ECJ, court of auditors, and the half a billion voters, to name but a few.
Next?
April 2, 2023
Reply to reply: The ECB has a role in oversight of the EU member countries and if any one of them is going off track in any way they will be quickly pulled in but we don’t have that anymore- hence the Kwartang mini budget affair for example.
Then as far as bad government goes the EU couldn’t stop the disastrous brexit vote even if they wanted to so yes Cameron’s government wasn’t up to much but the EU played no part in the vote. Neither can they do much today about Poland or Orban’s Hungary for example – two governments who are sometimes showing signs of getting ahead of themselves. But that’s not what the EU is about it is a club – not a government – and clubs have rules. The EU never imposed laws on us we agreed or we didn’t agree at the big table the same as the others also the same about taxes we could have remained wholly outside at any stage but we had bad representatives- useless negotiator’s with notions omly about themselves but with no networking skills and that’s the truth of it. The EU never required us to do anything we really didn’t want to do – we sat at the top table whrrw we were the law makers – but all gone now.
April 3, 2023
@James4; The EEC has always been more than just a “club”, the aims of the Treaty of Rome were very clear. Hence why Enoch Powell, who first supported the UK’s application to join the EEC back in the early 1960s, upon reading the said Treaty, became a life long opponent of the block.
Your comments do nothing to refute what our host said, although “bad laws” is of course a subjective judgment, all your comments do is prove the EU is not the ‘EUSSR’, as has been suggested by some Brexiteers, member states can leave! The EU clearly has ambitions to become a superstate with a Federal central govt, hence the Lisbon Treaty (a watered down version of the rejected Constitution).
April 2, 2023
A windfall is a peak in an erratic profit and loss performance. In terms of gas in the UK economy, it results from deliberate government negligence in insisting that we be subject to fluctuations in the global market, as a direct result of their ill conceived Nett Zero, and refusal to this day to maximise use of our own gas sources. A large slice of the inflation we are suffering is a direct result of government doctrinare attitude that I equate with such as the Inquisition. We await a Rennaisance which we are not going to get from consocialism. Bare this in mind when you make your mark in the ballot booth in May and later in 2024.
April 2, 2023
+100
April 2, 2023
I agree.
“What is a Windfall Tax?” – It is a tax levied by a Government bereft of any imagination or ambition, intended to silence the uninformed rantings of Labour and which will not only help to kill future investment in this Country but also make us even more dependant of foreign energy suppliers (who will not be subject to any UK taxes).
Dumb, dumb and dumber.
April 2, 2023
Its actually a tax of envy. ā¦they want of slice of anything that appears to be doing well, the better they do the bigger the slice ā¦sheriff of Nottingham modern-day robbery
April 2, 2023
Alas in the general election the only real choice (with any realistic chance of winning) will be Consocialists or even worse real Socialists given the voting system that pertains. They call this democracy.
April 2, 2023
I look forward to the Treasury offering to bung these energy companies a few bob when they next have a very bad quarter.āIf I were an energy company, I’d sit on the resources I owned as much as possible and wait to harvest them when a more favourable regime has arrived.āSimilar to large housing developers sitting on their land banks.āAnd look how that’s harmed the public.
April 3, 2023
They don’t actually lose anything long term. They can deduct losses from profits over the next five years. Don’t shed a tear for big oil and gas companies. Sitting on stocks produces no profits at all, only losses so that is not sensible and shareholders would sack any board saying they are not selling anything for the next few years.
April 3, 2023
Hi Graham,
I think a corporation tax loss can be carried back one year to set against that previous year’s profits.āOr it can be carried forward but only up to Ā£5m and at 50% for the rest.
I’m not saying the energy company would sell nothing.āI’m saying they’d delay the investment needed to exploit what’s untapped.āThis would put upward pressure on energy prices.
April 2, 2023
The windfall the fossil fuel industry got from the (deliberate) ramping up of the cost of energy is nothing compared to the one the renewable sector, particularly the windmill companies, is getting.
They’re paid at the same rate as gas, with none of the exploration costs. They’re paid when the wind blows; when they stand idle because it doesn’t blow and when it blows too hard so becomes dangerous for them to operate.
If they generate “excessive” energy because the wind is blowing at the right speed (ie peak efficiency) they have to shut some down because there is no storage capacity and “The Grid” can’t cope with it.
Already mega-wealthy landowners are paid through taxes levied on “the peasants” to pay for their installation on their land. And those same “peasants” are threatened with more taxes if they refuse to pay Ā£tens of thousands to scrap their gas central heating and switch to a less efficient and more expensive electric alternative.
It seems to be that the windfall we should really be worried about is the windfall of our money which is falling into the hands of the Elite Establishment Eco Nutters who have and are promoting the renewable energy scam.
I won’t be voting to be CONNED by the Blu-Green Eco Socialists.
April 2, 2023
There are many people in the world – some in our government and treasury – who are anti capitalism. Looking at the headings of about a half dozen articles in the Telegraph this morning, in each and every reader comment thread, there were many references to 1st April having gone. Meaning the ideas were thought to be jokes!
So with regard to taxation and windfall tax, why should that be any different? Illogical actions!
April 2, 2023
There are a number of factual errors in your otherwise sensible piece above, which I would like to put right
Firstly, since spring 2022 renewables have been the largest source of electricity in the UK. Renewables displaced gas generation 38-42% last winter and with SSEās commissioning of their Dogger Bank Array āAā windfarm next month an additional 3.5GW of renewable electricity will be added, much of which is scheduled to be sold to the French
Secondly, the fossil fuel cartel imposed a quadrupling of the wholesale price of gas and a near doubling of the price of oil well before the Russian invasion of Ukraine, in winter 2021-2022. This completely unwarranted co-ordinated price rise by a powerful cartel has caused real problems for the people of the UK and thanks to the tremendous subsidies paid to them, has massively added to the national debt
The government has now added to this misery by deciding to cave in to the fossil fuel industry demand for yet more subsidy in the form of Ā£20billion for their carbon capture and storage scam, instead of supporting the UK nascent grid scale electricity storage systems developed by British universities and the successful start-up Gravitricity, which is currently building Britains first full scale wind farm electricity plant
Itās disappointing that so many otherwise sensible MPās are supporting the CCS scam, it is certainly a waste of taxpayers money
Reply Glad you accept renewables generate a minority of our electricity on average, and of course can fall to as little as 1% on a low wind winter evening requiring lots of stand by fossil fuel stations. Important also to remind people the big majority of our energy use is direct fossil fuel with electricity around 25%.
April 2, 2023
Yes, when my vegetable patch doesn’t supply all that I need then I sometimes have to go to the shops.
So we should all give up growing anything?
April 2, 2023
Some corrections to your post. According to SSE Dogger Bank A is just 1.2 GW, and they hope to have first power in the summer and to complete commissioning around year end. The other phases will not be built until later.
Since the connection point to shore is not close to the French interconnectors it will not be likely to make much of a contribution to exports to France, especially as there are severe grid constraints that often leave the French supplied by imports on BritNed and NEMO.
The rise in gas prices in 2021 was the result of demand exceeding supply, thanks to a combination of underinvestment in 2020 when there was a large surplus and very low prices and covid restrictions, rebound in demand after covid, and ESG policies that prevented the development of new resources. These effects were global.
CCS is the consequence if government net zero policy because if you insist on building lots of wind you need to have backup for when the wind doesn’t blow and because the government refuses to allow the cheapest, least resource hungry ways of providing that. It is not something the industry has asked for, but rather something they will be coerced into attempting to provide, despite no commercially successful plant having been built.
I do agree it’s a ridiculous waste of money.
April 3, 2023
Heavily subsidised “renewable” energy – which is one reason why our energy bills are so high.
April 2, 2023
What you say about the one off profits is right. No-one ever mentions the one off losses – Ā£16 billion for Shell and Ā£18 billion for BP the previous year, if I remember right. To be logical, these losses should be made good by the taxpayer shouldn’t they?
April 2, 2023
Rose
At last somebody has outlined that no business is guaranteed profits, but typical of left wing politicians to make it sound like being in business is some form of a street to wealth.
If you are purchasing stock, goods, capacity, or raw materials at a higher price than before, then you either borrow to finance that stock holding (at extra cost) or you reinvest your past profits, probably held in reserve from previous years, which is exactly the same as you do when you make a loss.
Higher cost goods/stock with the same % margin of course means greater turnover and greater profits if all other costs are the same.
Yes you can hedge your bets with future purchasing, and that works for a limited period of time, but only if you have read the market right, read the market wrong, and you are stuck with overpriced goods.
“What is a windfall”
Well years ago it was the scrap fruit which fell to the ground, which could then only be used for very limited purposes, thus it was sold if it could be sold, at an almost give away price.
Not sure it was ever meant to describe extra profit, or extra tax.
April 2, 2023
The two purposes of tax are to fund Govt spending and to promote better behaviour.
āBetter behaviourā is mainly avoidance of preventing harm. So, taxing excessive energy consumption, pollution, damage, graffiti, gambling, smoking, speeding, waste and other such things that reduce the quality of life makes sense. Preventing harm avoids the need for higher taxes to solve the problems that otherwise result.
Taxing good things like employment income discourages productive work.
āWindfall Taxā is strange. It is as daft as Window Tax was, and applying it beyond the duration of the windfall is daft.
Newton was inspired by a falling apple yet this Govt is inspired by taxing anything that moves.
April 3, 2023
Surely ‘windfall tax’ happens only after the windfall – it cannot be projected into the future. That it is, is news to me and is lunacy, but this government seems peculiarly adept at making lunatic policies, not thought through.
April 2, 2023
I still canāt get my head around a Tory Party of high taxation
The manifesto said you where going to reduce taxes, the Tory membership wanted lower taxes, the wider Tory voting populace wanted lower taxes, we hear that Tory MPs wanted lower taxes and even some in the cabinet say they wish we could have lower taxes ā¦so why is this government taxing everything and taxing high
April 2, 2023
It seems to me, that Jeremy Hunt is the Dianne Abbot of the Tory party.
April 2, 2023
Diana was Goddess of the Hunt.
Jeremy can bow and quiver in awe of her targets about police numbers.
April 2, 2023
‘Windfall taxes make the taxed things dearer’
Well surely that is standing things on their head and not at all logical. Are you saying that the price we paid before the windfall taxes had no effect? Windfall taxes follow windfalls, not the other way around. No rip off prices (windfall profits), no windfall taxes so there would be no effect. We are still paying over the odds even though oil and gas prices have fallen back and we are told we will do so all this year. Why? What losses need to be made up? We are even paying for the losses of the energy companies that went bust on top. Seems the government is determined to make us poorer and the howls of anguish will be felt at the end of next month when all the bills are in and the ruinously high tax take comes out of wage packets. You deserve to be out of office for a long long time and although basically a Tory supporter, I hope it happens.
Reply Companies have to price to reflect costs of windfall tax. they also slash investment in new capacity ensuring greater scarcity and higher prices ahead.
April 3, 2023
How can they ‘slash investment’ when they are still massively is profit, even after the taxes and these decision are made years in advance? The companies did not know they were going to be windfall taxed before they ripped us off, especially as the Tories shilly shallied about doing it and were shamed into it. Secondly, if they invested the money in more exploration or newer forms of energy you would be right. However, at least one major company (no names as you won’t like it) maybe more, ‘invested’ the extra money in share buy backs, thereby ensuring rising share price and guaranteeing their huge bonuses in the future.
You may be content with the price of energy, on your parliamentary salary and outside interests, you will not feel it. I as a pensioner do not appreciate it at all, but there is nothing we can do, we are caught in a bind which we cannot get out of and which you defend. It’s the old party doctrine of look after the uber rich and to hell with the poorer people.
April 2, 2023
“What is a windfall?”
Back to first principles. No one expects to see the delicious fruit blown down from the tree and available to be picked up and eaten without the normal effort of getting the stepladder and basket out and climbing up to the branches to carry out some picking.
The energy companies and miners will have put in the effort to extract the raw product and refine it into something fit for sale. If external circumstances mean that their product is in greater demand and can command a higher price, leading to better than expected profits, a malevolent government can decide to help itself to a higher share of those deemed excess profits. They are not, however, windfall profits and the opportunist tax grab cannot reasonably be described as “windfall”.
April 2, 2023
All that you say is true, which leads to the conclusion that there are only two possibilities:
1. They don’t know what they’re doing.
2. They do know what they are doing, so they are deliberately trashing the UK economy and energy generation.
Both are reasons to get rid of them asap.
April 2, 2023
Agree wholeheartedly
April 2, 2023
Once again Sir John exposes a system of taxation that impinges on our day to day cost of living . Whatever the history we seem to be powerless in managing the circumstances we have to face . At the fuel pumps we paid far more than we ought to have done for our petrol ; food prices have gone through the roof and now we are faced with a big hike in taxes on our homes . The country is in a mess and I have no trust in the Sunak / Hunts’ approach to get us out of it .
April 2, 2023
Not sure about that. Are you seriously suggesting that when oil and gas companies suddenly find āthe price has gone upā they react by saying āwe wonāt put OUR prices up, we donāt need even higher profits, weāll be nice guys and keep prices the sameā?
I think not! They milk it for all the profits they can get – so the directors get massive bonuses (for doing nothing!) and the dividends go up.
So, yes, given that oil and gas are utilities we all need, tax excess profits. If the corporates donāt think they make enough money, we could always nationalise them
Reply Venezuela tried that and ended up short of petrol despite having huge oil reserves.
April 2, 2023
Reply to reply. Thatās like saying that because one building company went broke so all building companies will go broke.
We used to have nationalised gas and electricity and the only time we āran outā was when there were strikes. Decent management means no strikes.
April 2, 2023
“A windfall”? Hmm. Is that what happens when those expensive ugly turbines across our agricultural landscapes fail to generate any electricity again?
April 2, 2023
Part 1 A windfall is when you own an EV and have off street parking, and you donāt have to pay Car-Tax, or the ULEZ or CAZ charge, you get a subsidy when you purchasing your EV, another subsidy when charging your EV, a subsidy when fitting a charging unit at your home ā¦elites getting windfall ā part 2 āheat-pumpsā subsidy
April 3, 2023
When will this madness, end?
April 2, 2023
Back in July 2022 the climate activists, ClientEarth, won their case against the Government at the High Court, which ruled found that the Net Zero Strategy, which sets out plans to decarbonise the economy, doesnāt meet the Governmentās obligations under the Climate Change Act to produce detailed climate policies, that show how the UKās legally-binding carbon budgets will actually be met. The ruling also states that the Governmentās Net Zero Strategy did not add up to the reductions necessary to meet the sixth carbon budget, which is the volume of greenhouse gases the UK can emit during the period 2033-37.
As a result the government last week announced a ramping up of their Net Zero Strategy, known as āPowering Up Britainā, which included the Ā£20bn CCUS project to reduce global CO2 emissions by 0.01% per annum together with many other spending plans and the intention to deliberately and artificially increase the price of domestic gas to incentivise the uptake of heat pumps.
So our climate and energy policy is now in the hands of High Court judges and how much do they know about the climate and our energy industry to be able to make such important judgements?
April 2, 2023
Now youāll understand why the government has been pushing the smart-meter ā¦.so they can switch them all off
April 2, 2023
‘If the UK government perseveres’.
You mean, if your party, the Tory party to which you are fanatically loyal, perseveres in government, what will you do? Nothing, apart from write something like this. Your party in government can easily ignore you, as they do, as they know you are not prepared to do anything dramatic or risky to yourself. And they know no matter how extreme they get you will stay with them, and try to get us to do the same.
Reply I regularly urge my party to change views and policies.I vote against or decline to vote for when I am particularly critical. I do think these issues have to be resolved through the Conservative Party as all the left of centre parties in the Commons propose far worse policies and outcomes. I was right about Brexit. UKIP only ever got one MP elected in a General election and took votes away from MPs who could get Brexit through, helping Remain left of centre parties win more seats.
April 3, 2023
“I was right about Brexit. UKIP only ever got one MP elected in a General election and took votes away from MPs who could get Brexit through,….”
Except most of them wouldn’t have voted for Brexit since they were LibCON Remainers like a majority of CON MPs. So UKIP was absolutely right to target pro-EU LibCONs, along with LibDems and Labour.
LibCON MPs support the high tax, Blu-Green Socialist policies Hunt and Sunak are pushing, so Reform UK are absolutely right to target them.
April 2, 2023
Records show that the Conservative Party Association in Richmond had a āwindfallā – a substantial donation which coincided with the selection of Richi Sunak.
I wonder if they had to pay a windfall tax?
April 2, 2023
Early in 2008 I was working in Bahrain and there was a downward spike in the international price to $30 per barrel.
At that price, Shell and BP were losing money hand over fist. I don’t recall anyone – certainly not the Labour Party – proposing an anti-windfall tax rebate at that time. Funny, that!
April 2, 2023
Ā«Ā Ed Miliband has urged the government to introduce a āproperā windfall tax on oil and gas companies after Shell reported profits of nearly Ā£8.2bn for the third quarter, more than double the amount it made during the same period last year.Ā Ā» Labourlist
So how would this work? I read a lot of that Ā£8.2bn profit wasnāt made in the UK but on worldwide income? Where are these profitable oil and gas companies located for tax? What is the amount for UK generated profit only after a share into their future R&D etc.?
So if government canāt get its windfall that it is already planning to spend off these gas and oil companies, who gets clobbered for a windfall lower down the food chain, anyone making more than Ā£50k?
April 2, 2023
It is clear that communists are in charge of our energy policies. Expensive, intermittent, unreliable, low energy density renewables, all supplied by a state described by our security services as āhostileā, are selected for power generation instead of affordable, reliable, high energy density and secure nuclear fission. They plan for us to live with intermittency using surge pricing and rolling blackouts controlled by individual smart meters. Cultural Revolution style behaviour change will applied to cope with the lack of power and intermittency, enforced by daily propaganda lessons by the state broadcaster. We are to live with deliberately made expensive energy and food by restricting travel within 15 minute cities and eating insects and factory grown meat for protein. To look good on the international stage the budget included that Ā£20bn will be spent on a technology which does not yet exist economically to reduce global CO2 emissions by 0.1%. Our manufacturing is being driven offshore to reduce our CO2 emissions and carbon taxes are planned to be applied to people and imports. Manufacturers of heat pumps and evs are fined if they fail to sell their quota of impractical devices to the unwilling public. As communists, the elites of course will not be changing their lifestyle.
If anyone wants to know the inevitable result, just read the history of communism in the last century.
April 2, 2023
What is the point of discussing anything ever again?
It seems to me that the LibDem Worker Protection (Amendment of Equality Act 2010) Bill, assuming it goes through ( and it will) puts an end to everything.
How can the country function with that in place? How can we have shops, bars, public transportā¦?
Is that the idea?
April 2, 2023
What SME business is ever going to employ anyone ever again
April 2, 2023
I tried looking at the Generator Levy in the Finance Bill. It’s 35 pages of complex legislation that fails to really tackle the problem. There are attempts to cope with the very different financial structures, membership of groups, trying to distinguish between a hedge and an advantageous transfer price etc. Large chunks of profit have been made offshore by trading companies arbitraging the fact that they may have had access to contract gas nine times cheaper than they could resell it for in Europe. Some of the profits went to LNG shipping companies, who could charge a fancy charter rate for speeding up deliveries, and then for acting as offshore storage when deliveries could not be accepted because of constraints at regasification terminals. Windfall taxes cannot reach into these areas. They have not reached into the outrageous subsidies being paid on top of high market prices.
It would have made more sense to cut the subsidies to renewables and carbon taxes. Then subsidies to consumers could have been cut pari passu.