Why windfall taxes are a rotten idea

Annual profits of £9.5 billion at BP this week followed a £20 billion jackpot at Shell last week, thanks to soaring global wholesale energy prices that BP boss Bernard Looney recently said had turned his company into a ‘cash machine’. For the very same reason, Ofgem has announced a 54 per cent (roughly £700) increase in the energy price cap for 22 million UK customers, while the Chancellor is scrabbling to keep at least some of those households out of ‘fuel poverty’ by offsetting half the rise with a £200 energy discount, to be recouped over five years, plus a £150 council tax rebate.

As investors in the oil giants look forward to enhanced dividends and multi–billion share buybacks, was there ever a plainer or timelier case for a windfall tax? Ed Miliband, Labour’s shadow secretary for climate change, says it ‘beggars belief’ that the government won’t do it; the Lib Dems and Greens are naturally gagging for it; more significantly, so were 75 per cent of Conservative voters polled by Savanta ComRes in mid-January.