Making good use of windfall profits
Back in the Spring, the TUC’s Budget submission called for a windfall tax on energy companies. According to Ofgem, the energy regulator, the electricity industry will benefit from a windfall profit of around £9 billion from the free allocation of their emission permits from 2008 to 2012. A tidy profit with permits worth 24 euros a tonne. The sector made substantial windfall gains from emissions permits in the first phase of emissions trading that in finished 2007 – one estimate for the former DTI suggested £800m a year.
Given this windfall profit, we believe the electricity industry has a moral obligation to put something back into society. Of the many competing demands for a slice of this revenue, we highlight tackling fuel poverty and investing in energy infrastructure.
Recognising the estimated £9 billion windfall profit over the period to 2012, identified by Ofgem, the TUC calls on the Chancellor to consider options for taxing these windfall profits, perhaps over the next two or three Budget periods, with money raised to address fuel poverty, boosting winter fuel payments, more home insulation and other environmental and job creating initiatives. The debate is hotting up – watch this space!