cDIREoCTIONmFOR THE pass DEMOCRATIC LEFT February 2009 Windfall Tax Campaign Toolkit ‘A windfall for social and environmental justice’ By Gemma Tumelty & Jenna Khalfan Windfall Tax Campaign Toolkit Introduction & Contents Rising energy and fuel prices are affecting everyone but it's the poorest and those on fixed incomes who are paying the heaviest price for the essentials of life - light and heat. This situation is unsustainable and should be challenged. Compass believes that the moment is right for the government to levy a sensible one off windfall tax on the energy and oil companies to guarantee social and environmental justice for the common good of people living today and for future generations. The government can move quickly and decisively now - but it needs to know that this is what the people want. We have developed a toolkit to help you campaign locally and nationally to have your say in this important debate. Contents 1. Briefing questions and answers 2. Key statistics 3. Campaign aims and actions 4. What you can do locally a. Get local Labour Party, Students’ Union and trade union support b. How to Lobby your MP c. Local media d. energy companies 5. Building a local coalition: pensioners groups, anti-poverty groups, church groups, fuel poverty groups, single parent networks etc Appendix 1. Who supports a windfall tax 2. Model letter to MPs 3. Model letter to the Chancellor Windfall Tax Campaign Toolkit www.compassonline.org.uk PAGE 1 1. Briefing questions agreed to raise this to a £150 million a be particularly targeted at families in or and answers year by 2010, with the rate of price rises facing fuel poverty. However the best this is nowhere near good enough - every strategy to eliminate fuel poverty forever 10% increase in energy prices mean an is to ensure every home is insulated and Use the information below to inform extra 400,000 people go into fuel poverty. energy efficient to the highest standards. people about the arguments for a Therefore much of the money raised windfall tax. This is coupled with a lack of investment should be used to kick-start a national in securing sustainable energy supplies for programme of home energy efficiency and Why is a windfall tax important? future generations, which is essential if we installing renewable energy, starting with Rising energy and fuel prices have become are to stabilise energy prices for the the homes of the fuel poor. the political issue, affecting family in the longer term. By 2020 the UK wants 15% country. It’s absolutely right that the of all energy to be from renewable Used in the right way this could benefit corporations who are benefiting sources, this is currently only 2%. Huge the UK economy as a whole - just as the inextricably from that original investment increased investment is urgently needed if New Deal in 1997 created new jobs for and the later privatisation pay their fair the government is to meet its target. the long term unemployed, such an share to society. Compass believes that it’s investment could see the creation of now vital for the government to come out Hasn’t British Gas just agreed to cut hundreds of thousands of new jobs in decisively in favour of a windfall tax to prices by 10%? renewable energy production, insulation, guarantee social and environmental justice Yes, but since 2000 gas prices have risen building renovation and other sectors. both now and in the future. It is time for by 100% and electricity price have risen by action. 61%, when compared to this, 10% is Hasn’t the Government committed to an clearly not enough. Energy companies are energy package. Has a windfall tax been proposed before? likely to continue report profit increases Yes, and whilst the £300 million a year Yes. A similar windfall tax was levied when over the next 12 months, so Compass over 3 years (£900 million) is very the Labour government first came to want to see a sensible one off windfall tax welcome, it is already clear that this is not power in 1997 on the unearned profits of to ensure that we start to tackle fuel enough. According to LGA report ‘switch the newly privatised utilities and raised £5 poverty and guarantee environmental off, switched on’ the government needs to billion; similarly in 1981 the Conservative justice. spend in the region of £5bn on a home government levied a windfall tax on banks insulation scheme to make a real impact. as excessive interest rates led to In the current economic climate, aren’t substantial unearned profits for the main energy companies struggling too? What will happen if the Government clearing banks. In 2008 the spike in the Energy companies have complained that a does not act now? price of oil is now leading to substantial windfall tax would damage their If the government fails to act on this issue, unearned profits for the main oil and businesses. The Privatised plcs/New Deal then the cost to all of us will not energy companies. We therefore call on windfall tax did not damage the just be in the form the government to levy a windfall tax on companies taxed, neither did it allude to of the energy and oil companies. greater borrowing or reduced business investment. What does this have to do with us? The average annual spend on domestic Despite claims of a difficult trading energy per household has now breached environment the profits of the main £1000, and since 2000 Briton’s have faced energy providers have risen from £557 gas price rises of 100% and electricity million in 2003 to now over £3 billion. price rises of 61%. This combined with recent news of vast profits made by oil companies - BP alone The government estimates that 2.5 million is now making £37 million a day in income families are living in fuel poverty, whilst with a 23% increase in profits to £6.7 Energywatch puts the figure at over 4.5 billion for just the first 6 months of 2008. million. It is estimated that 6 million families will be in fuel poverty by 2009 What will the money be used for? and with 3 million facing unemployment Revenues from the tax should be ring- that figure can only rise. Yet despite the fenced to deliver social and environmental billions made in profits, the energy justice for all. Part of the money raised industry spends just £50 million a year should be used to immediately help those combating fuel poverty and has only struggling with rising fuel bills and should compass PAGE 2 www.compassonline.org.uk Windfall Tax Campaign Toolkit increased bills through the letter box, Home energy prices are still rising by up Response to BERR report there’ll be a much bigger and longer term to 35% whilst the price of oil is finally price to pay in terms of the social and dropping 12 'Energy suppliers give more direct help to environmental consequences. their most vulnerable customers than any BP alone is now making £37 million a day other industry. Suppliers recently announced 2. Collected Facts & in income with a 23% increase in profits to an extra £225 million for the period 2008 - £6.7 billion for just the first 6 months of 2011 in voluntary contributions, in addition Figures 13 2008 to the £150m already allocated and the £1.4 billion energy efficiency commitment The average annual spend on domestic The government estimates that 2.5 million 14 to help customers most at risk. There is no energy per household has now breached families are living in fuel poverty whilst other industry that spends so much money 1 £1000 Energywatch puts the figure at over 4.5 to reduce demand for its own product' 17 million 15 Since 2000 Briton’s have faced gas price Two million people are already in debt to rises of 100% and electricity price rises of their energy companies 18 61% 2 With every 10% increase in energy prices Profits in the energy "market" have risen 400,000 people go into fuel poverty. The almost six-fold since 2003, from £557 rise in prices since 2004 means the 3 4,5,6,7,8 million to now over £3 billion Government is certain to miss its target of eradicating fuel poverty for vulnerable The "market" is controlled by a monopoly households by 2010.' 19 of the 'Big 6' who control '99% of the 9 electricity market and 100% of gas Labour has reduced fuel poverty from Together, BP, Shell and Centrica made the almost 6.5m households in 1996 to a low equivalent of £1000 profit a second. Almost of around 2m in 2004 20, but numbers are as much as the average domestic energy back on the increase, the last figure for 2005 10 bill put the amount of households in fuel The energy industry spends just £50 poverty at 2.5m 21 Energy companies have consistently put million a year combating fuel poverty14 and the rise in gas prices down to the price of has only agreed to raise this to a £150 The UK target is that by 2020 15% of all 11 16 oil million a year by 2010 energy should come from renewable sources,‘ this is currently only 2%. 22 1 ‘U.K. power bills may rise, adding to inflation woes’ (accessed 31-07-08 - http://www.independent.ie/business/european/uk-power-bills-may-rise-adding-to-inflation-woes-1399941.html) 2 Table 2.1.1, BERR: Quarterly Energy Prices – June 2008 (accessed 31-07-08 http://www.berr.gov.uk/files/file46669.pdf) 3 P24 ‘Business and Enterprise Committee: Energy prices, fuel poverty and Ofgem Eleventh Report of Session 2007–08 Volume I’ (accessed 31-07-08 http://www.publications.parliament.uk/pa/cm200708/cmselect/cmberr/293/293i.pdf) 4 Centrica plc Preliminary results for the year ended 31 December 2007 (accessed 31-07-08 http://www.centrica.co.uk/files/results/2007_prelim_results.pdf ) 5 BBC: RWE profits