Labour’s Ed Miliband this morning called BP’s profits in the first quarter of this year, just shy of £4bn, “the unearned profits of war,” with the party calling for the windfall tax to go further.
The shadow climate secretary argued that “every excess pound that the energy giants rake in is at the expense of British families,” which have been grappling with record energy bills over the past two years.
BP is already subject to the windfall tax in the UK, and paid more than half a billion to the Treasury over the quarter.
This follows Chancellor Jeremy Hunt hiking the Energy Profits Levy to 35 per cent last November – while also expanding its duration from three to six years.
But Labour are this morning pushing for the levy to go further, with leader Sir Keir Starmer proposing that the levy is expanded and used to freeze council tax.
He has also sustained calls for the investment relief to be scrapped from the levy, which Downing Street has maintained in the tax to encourage investment to shore up supply security.
Miliband also contrasted the lack of investment subsidies for renewables with the relief built into the Energy Profits Levy.
He said: “Yet after all this time, the Tory windfall tax is still full of get out clauses with billions being bunged at oil and gas companies in special subsidies not available in any other part of the energy sector.
“Labour would be doing the fair and right thing and bring in a proper windfall tax on oil and gas giants to help freeze council tax this year.”
The latest policy proposal also comes ahead of the local elections this Thursday, with Labour talking tough on the oil and gas profits to lure voters.
The windfall tax was introduced by then-Chancellor Rishi Sunak as energy prices skyrocketed during the Ukraine War.
However, most North Sea operators are not international energy giants, who are able to offset the windfall tax with their vast profits and have a diversified global portfolio of projects.
The tax grab has been blamed by Harbour Energy, the UK’s largest North Sea oil and gas operator, for impending job losses.
It has also seen Enquest and Total pull out of domestic projects, while Ithaca Energy is locked in talks with the government over the Rosebank field.
Ithaca has a 20 per cent UK’s largest undeveloped oil and gas field – but remains concerned over whether the project is viable.
The windfall tax row had been predicted by some analysts ahead of BP’s update.
“We are likely to get the usual cacophony of quarterly pearl clutching from politicians about the “obscene” profits being made by the evil oil and gas companies, completely deaf to the fact that it is the same policies enacted by these politicians over the last 20 years that have prompted energy prices to rise in the manner that they have,” said Michael Hewson of CMC Markets ahead of the results.
Ed Davey, the Lib Dem leader, said the profits were a “kick in the teeth” for struggling Brits.
“The Conservative government has let oil and gas giants off the hook for billions of pounds, while people and businesses struggle to pay for their gas and electricity,” he added.
The row follows follows BP’s bumper £23bn profits last year – fuelled by soaring fossil fuel prices in the wake of Russia’s invasion of Ukraine.
While wholesale costs have dipped since then – gas remains more than double conventional pre-crisis prices while oil has remained robust at around $75 per barrel amid challenging economic headwinds.
BP also rewarded shareholders with a 6.6 cents per share dividend payment – up from 5.4 cents a year ago.
However, the energy giant has slashed overall buybacks from £2.2bn to £1.4bn quarter-to-quarter.