A Windfall Profits Tax Is No Answer to Britain's Energy Crisis
by Bob Ansell
Britain is in the midst of an energy crisis, and the government and the labour party are playing the same game looking for a solution to satisfy the electorate: namely tax the oil and gas industry with a windfall tax.
This approach does not even tackle the question of why we are paying so-called world prices for energy when so much of it is generated in our own waters or by nuclear power plants based in Britain. Why has the cost of electricity generated by wind power doubled, for example?
We would argue that the whole premise of a windfall tax is wrong. It supports the decades of profit-making hitherto and underscores the general lack of control we have over the whole, fragmented industry. An independent Britain needs ownership and control, not only of its oil and gas industry but of its entire energy generation infrastructure.
Hence, we will not entertain those voices in government arguing that we must not upset energy companies because it will deter them from investing. This view suggests that our future depends not on our own efforts and talent but on being generous to large corporations with little interest in Britain’s wellbeing.
Interestingly, this politically short-sighted approach to our energy crisis is taking place alongside the publication of a recent government policy paper entitled, ‘British Energy Security Strategy’. This document has a lot we would support. But, even in the foreword, by Boris Johnson himself, there is an admission of the current failed position.
Johnson says, ’For most of the industrial age, the UK was what we now call “energy independent”. …
… Yet as the years passed, we drifted into dependence on foreign sources. Sometimes this was through deliberate planning; more often it was the by-product of policy fudges, decision-dodging and short-term thinking.’
The ‘deliberate planning’ that created the dependence on ‘foreign sources’ that Johnson refers to is of course epitomised by the wholesale privatisation of our infrastructure by his predecessor, Margaret Thatcher, in the 1980s. Following privatisation, much of our energy capacity and infrastructure has wound up being owned and controlled by Johnson's 'foreign sources'.
Inside the British Energy Security Strategy document there is a great deal that Rebuild Britain would support. The report is a policy statement by the Government and argues, for example, for significant investment in renewable energy, for investment in energy storage technologies and for a focus on sustainability.
However, arguably the cheapest and quickest route to independence, the growth of onshore wind power has been left out of the policy. In addition, the focus on nuclear energy leaves many questions unanswered, most notably how do we create Britain’s capacity to design, build and maintain them? Successive governments have promised to expand our nuclear industry. All such promises have been abject failures, with massive underinvestment in the skills and training required to build and sustain the industry.
The current policy is to develop what are called small modular reactors. The argument runs that these can be constructed rapidly with standardised parts largely built offsite. However, the CEO of the key player in this scenario, Rolls Royce, is not planning to have any built for a decade. This is not a solution for Britain’s independence or a solution to the current energy crisis.
At the very least our job, in the short term is hold the government to account. This policy document is a start but with many caveats. At the very least we must ensure that contracts are awarded to British firms training and employing workers in Britain. In addition, we need to push for additional education and training so that we have the skills to design, build and maintain all aspects of our energy the infrastructure.
But, our job in the longer term, is to regain our independence by making all energy infrastructure state owned.