Downloading PDF. Please wait... Issue 2112

Tax the energy giants and cut fuel bills

This article is over 15 years, 10 months old
Corporations make billions while our fuel prices rise over 20 percent, writes Sadie Robinson
Issue 2112

Millions of people across Britain are struggling with soaring household energy bills. The government could act to ease the pain by taxing oil and gas firms, or imposing a limit on price rises. Instead it refuses to do anything that would harm profits.

EDF Energy raised its prices again last week – by 22 percent for gas and 17 percent for electricity. On average EDF customers have seen their bills rise by over 33 percent since the start of the year. British Gas customers have seen their gas bills rise by 77 percent and electricity bills by 74 percent since 2003.

These energy companies claim that rising costs are forcing them to raise prices. But in fact they are using rising commodity prices as an excuse to rake in the profits.

This week oil giant BP reported that its profits for the first six months of the year had increased by 23 percent to £6.7 billion.

British Gas, due to announce its profits on Thursday, expects profits of between £100 and £200 million. In 2007 it raised prices to boost its profits by an obscene 500 percent.

Centrica, the parent company of British Gas, expects to announce pre-tax profits of £880 million for the first half of this year.

In sharp contrast to these riches, over 4.5 million people in Britain are already living in “fuel poverty” – spending more than 10 percent of their income on energy. This figure is set to rise by a staggering 50 percent as energy companies keep raising prices.

Ordinary people also face rising debt just to stay on top of the price rises. Around 6.8 million households in Britain are in debt to their energy supplier. Total personal debt is now rising by an average of £1 million every five minutes.

It may be the height of summer, but already people are worrying about how they will survive the coming winter.

Fuel poverty leads to the deaths of between 20,000 and 50,000 people in Britain each winter. Over one in three pensioner households are expected to be in fuel poverty by the end of the year.

Centrica’s managing director Jake Ulrich – who receives a salary of £1,033,000 a year – admits that fuel price rises are “going to hit people hard”. Fortunately he has advice for how people can soften the blow – they should wear “two jumpers instead of one”.

The bosses and the government are completely removed from the reality of life for ordinary people.

The government votes to keep lavish expenses for MPs – but it refuses to implement even the most minor measures that could limit the hardship faced by ordinary people.

The parliamentary business and enterprise committee has investigated the energy market in light of the current crisis.

But its conclusion is that the market is not functioning efficiently enough and that we need more “liberalisation”.

In the face of the massive political crisis that Gordon Brown now faces, some argue that he is simply a victim of a global economic recession that is pushing up the cost of living.

The massive unpopularity of New Labour following the wars in Iraq and Afghanistan and its constant neoliberal attacks on working people is conveniently forgotten. Brown is portrayed as powerless in the face of the global economy.


It is true that energy and food price rises are fuelling anger with the government. But what people are really angry about is the government’s response.

Brown is not powerless. There are many things he could do to ease the burden on working class people. He could implement a windfall tax on the energy companies. He could increase corporation tax. He could impose a limit on the amount that firms can raise energy prices.

But instead of this New Labour has repeatedly cut corporation tax, which currently stands at just 28 percent.

The People Before Profit Charter puts forward demands that would stop ordinary people sinking deeper into poverty.

As well as the demands to tax corporate profits, the charter calls for an end to Brown’s 2 percent pay limit on public sector workers, the abolition of tax on fuel and energy for old people and the poor, and the restoration of the link between state pensions and average earnings.

New Labour is doing none of these things because it defends the interests of the rich and business.

Making sure that workers don’t pay for the crisis means building resistance on the ground. The People Before Profit Charter can help mobilise that resistance.


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