UK Energy Windfall Tax: Do Labour's Figures Add Up?

Oil and gas transnationals have reaped unexpectedly high profits as western sanctions on Russia over its military operation in Ukraine have sent market prices soaring. But recent estimates are that a so-called 'Robin Hood' tax on energy firms would raise at most £1.95 billion — £70 for each of the 27.8 million households in the UK.

The British government has not ruled out bending to the opposition's call for a crisis "windfall tax" on energy company profits — but will it really benefit bill-payers?

The Labour Party is demanding a 'Robin Hood' tax on oil and gas company profits, which it claims would pay for a bill rebate of "£200 or more" for "most households," while the lowest-oncome families would get "targeted extra support" of "up to £600 off bills".

Oil and gas transnationals have reaped unexpectedly high profits as western sanctions on Russia over its military operation in Ukraine have sent market prices soaring. Electricity and gas bills and service station pump prices have risen by around 50 per cent, with a knock-on effect on the prices of other goods.

But recent estimates are that such a tax would raise only £1.2 billion to £1.95 billion — or between £43 and £70 for each of the 27.8 million households in the UK.

Even at the upper end of those assessments, the one-off tax would only add up to £140 for half the homes in the UK.

Labour leader Sir Keir Starmer used the tax scheme to score points off Prime Minister Boris Johnson at last week's PM's Questions in Parliament, insisting the government would eventually be forced into a U-turn on the issue. On Monday, Johnson conceded it remained a possibility.

"No option is off the table, let's be absolutely clear about that," Johnson said.

"I'm not attracted, intrinsically, to new taxes," he insisted. "But as I have said throughout, we have got to do what we can — and we will — to look after people through the aftershocks of COVID, through the current pressures on energy prices that we are seeing post-COVID."

"We are going to put our arms round people, just as we did during the pandemic," the PM said — eventually. "Everybody can see the increase in energy prices. There is more that we're going to do. But you'll just have to wait a little bit longer."

No party in Parliament has yet addressed the elephant in the room. Energy prices will remain high until supply catches up with demand — and with Russia producing 40 percent of the world's gas exports and 34 percent of European oil imports, the Western economic embargo is driving the energy crisis.