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Labour calls for windfall tax as Shell profits double during bills crisis

Labour has called for a windfall tax after Shell doubled its third-quarter profits with Britons facing soaring energy bills and the threat of blackouts.

The energy giant recorded profits of £8bn, double those for the same period as last year. The company made big gains from selling expensive gas, which offset the fall in oil prices.

Shadow climate secretary Ed Miliband called for a “proper” windfall tax to make energy companies “pay their fair share”.

“Rishi Sunak’s existing plans would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks,” he wrote on Twitter.

TUC general secretary Frances O’Grady said Shell’s profits are “obscene”.

“The government has run out of excuses,” Ms O’Grady said. “It must impose a higher windfall tax on oil and gas companies. The likes of Shell are treating families like cash machines.

“Today is another reminder of why need to bring our energy sector back into public ownership. Households across Britain are being fleeced.”

Between April and June, Shell reported record profits of £9.8bn as oil prices surged to £88 a barrel. Since then, energy prices have fallen back but remain at elevated levels.

So far this year Shell has reported £25bn in profits – more than double the amount it made over the first nine months of 2021.

New chancellor Jeremy Hunt announced earlier this month that the freeze on energy prices will end in April next year. The government had previously promised the freeze would last two years.

Asked on LBC radio about an extended windfall tax, Conservative Party chair Nadhim Zahawi said that “absolutely the chancellor and the prime minister will look at every decision”.

Rishi Sunak and Jeremy Hunt will deliver an autumn statement on 17 November (PA)
Rishi Sunak and Jeremy Hunt will deliver an autumn statement on 17 November (PA)

But he warned against creating “a tax system that disincentivises investment”.

Mr Zahawi said: “I would not preempt any decisions but absolutely the chancellor and the prime minister will look at every decision and will ... deliver an autumn statement that demonstrates we have an energy plan that delivers energy security because what you can't do is create a tax system that disincentivises investment.”

Charities have warned that the axing of the energy price guarantee from April next year could lead to almost 11 million UK households falling into fuel poverty.

The End Fuel Poverty Coalition described the outlook as “frankly terrifying” and urged the government to focus on a new package of support and energy market reforms, alongside investment in home insulation and renewables.

Greenpeace also called for a “proper tax” on the energy giant's profits as they continue to bank billions.

Liberal Democrat leader Sir Ed Davey said: “The Conservative government's refusal to properly tax these eye-watering profits is an insult to families struggling to pay their energy bills.

“Even the chief executive of Shell has admitted that oil and gas companies should be taxed more to help protect vulnerable households.

“It's time Rishi Sunak introduced a proper windfall tax and used the extra money to support people facing heart-breaking choices this winter.”

National Grid has warned there could be blackouts on very cold winter nights (Getty)
National Grid has warned there could be blackouts on very cold winter nights (Getty)

Shell announced that it would return a further £3.4bn to shareholders by buying back shares from them. The buyback is expected to have been completed three months from now.

Chief executive Ben van Beurden said: “We are delivering robust results at a time of ongoing volatility in global energy markets.

“We continue to strengthen Shell’s portfolio through disciplined investment and transform the company for a low-carbon future.

“At the same time we are working closely with governments and customers to address their short and long-term energy needs.”

Shadow climate secretary Ed Miliband said: “Further proof that we need a proper windfall tax to make the energy companies pay their fair share.

“Rishi Sunak's existing plans would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks.”

The government imposed a 25 per cent windfall tax on energy companies. However, the tax applies to profit made in the UK which, for most oil and gas companies, is a small part of their operations.

It comes as the head of the National Grid warned British households that blackouts may be imposed between 4pm and 7pm on “really, really cold” winter weekdays if Europe cuts gas exports.

Oil giant Shell is making massive profits this year (PA)
Oil giant Shell is making massive profits this year (PA)

John Pettigrew said electricity and gas may be switched off on “those deepest, darkest evenings in January and February” if energy supplies from Europe prove insufficient due to the war in Ukraine.

Analysts said further cuts from Moscow could leave the continent short of supplies.

Britain does not rely on Russia for gas but normally draws on European supplies to keep its power stations running in the coldest months.