Windfall tax call as British Gas owner reports £1.5bn profit

A forecast by BFY said the increase in the wholesale gas price sparked by Russia reducing the flow through the Nord Stream 1 pipeline to 20% on Wednesday, meant that October’s price cap – set by the energy regulator, Ofgem – could hit £3,420 for the average dual-fuel tariff, before jumping again in January to £3,850. 

That is a 77 per cent rise, rouglhly £2,300 a year more on energy bills for an average home.

Meanwhile, as households struggle, energy firms Centrica, and Shell have posted billion-pound profits. 

The British Gas owner made operating profits of £1.3bn, while Shell reported a £10bn profit between April and June.

Both firms have benefited from the surge in energy prices caused by Russia’s war with Ukraine.

Lib Dem leader Ed Davey called for a windfall tax and said the companies were “feasting on a profits bonanza”.

He added: “We need a much tougher windfall tax to get the funds to help millions of people through what will be the toughest winter in generations."

Mr Davey said the Energy Profits Levy put in place by Rishi Sunak when Chancellor would not cover the profits reported by Centrica and Shell.

“The Conservatives are too busy fighting amongst themselves to do anything about it. In fact, these profits aren't even covered by the windfall tax Mr Sunak eventually supported.

“For Liz Truss and Rishi Sunak to have any credibility at all they must come forward with this kind of radical package.”

Scottish Green MSP  Ross Greer also backed calls for a windfall tax: “It is simply disgusting that the UK Government lets these energy giants funnel billions of pounds to shareholders at a point when there is a real risk that even more people will freeze to death in their homes this winter due to soaring bills.

“If Westminster actually functioned to serve the interests of ordinary people rather than corporations and the ultra-rich, it would put in place comprehensive measures to collect these record profits through tax, and then use that money to help families pay their bills. "

The SNP’s Shadow Energy Minister, Alan Brown also called for government action.

“How many more people must be forced to choose between heating or eating before the Tories wake up to the brutal reality of life in Conservative Britain and take action?” he said.

Speaking to the BBC’s Today programme, the Money Saving Expert, Martin Lewis said the energy price increases would throw families into a "terribly difficult financial situation".

But he added: “The problem is we have this zombie government at the moment that can’t make any big decisions."

Mr Lewis said the Tory leadership candidates Rishi Sunak and Liz Truss should meet with Prime Minister Boris Johnson to “make a collective decision now of what help you can give and make an announcement to forestall the mental health damage that is coming across the country.”

He said: “there needs to be action now, you are all in the same party, you should be able to work out some unifying policy, something for heaven’s sake”.

"Sit in a room, decide what you are going to do together, take a little bit of collective action and give the panicking people across the country a little bit of respite from this,” he added.

Mr Lewis said households were going to be pushed into making "some awful choices".

"Year-on-year from last October to this October a typical house will be paying £2,300 a year more on their energy bills alone. Forget the rises in mobile and broadband and tax and everything else and petrol and food," he said. 

"People will be panicking, it will be desperate."

Speaking in Birmingham ahead of the start of the Commonwealth Games, the Prime Minister said the country would get through the cost of living crisis. 

Mr Johnson said: “I know that the pressures people are facing on their cost of living and the global inflation problems that we’re seeing, the energy squeeze, the cost of gas, every country around the world is feeling it.

“But my argument to you would be that sometimes you’ve got to go through periods of difficulty and you’ve got to remember that they are just inevitable.

“Every athlete - to pick a metaphor entirely at random - every athlete knows that you have to go through times of real strain and real sacrifice when you sometimes feel it’s not worth it if you’re going to be ready to win.

“And by the same token we in this country have to get through these difficult times, but we have to keep investing and getting ready.

“And that’s why I’m proud that this Government is engaged in the biggest ever programme - nothing like it since Victorian times - of infrastructure investment”.