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Shell has made £31bn in profit in the last 12 months. Here’s what that could pay for

While most of the UK tries to navigate sky-high energy bills and other costs, oil and gas producers continue to rake in huge profits. As calls for a windfall tax rage on, we’ve looked at how those profits could be spent

It’s been another record-breaking period for the world’s oil and gas producers, as Shell announced more than £8bn in profits in the three months up to September, almost double what it made in the same period last year. 

Energy bills for the average household are also almost double what they were this time last year. While millions across the UK struggle to choose between eating or heating and food banks are running out of stock to support the most vulnerable, Shell has taken £31bn in excess profits in the last 12 months.

Campaigners have long been calling for a windfall tax on the profits of energy companies who are bleeding the country dry.

So what could those profits pay for? Here are a few ideas.

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Pay energy bills for the UK’s poorest households

The prices of everything has gone up but nowhere is this more keenly felt than in people’s energy bills.

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In October 2021 the energy price cap — the level at which energy regulator Ofgem sets the price of gas and electricity — was at £1,277 for a year of energy bills for the average UK household. In August, Ofgem said the new energy price cap for October 2022 would be £3,549, a whopping 150% increase.

The government has promised to bring this down to £2,500 for everyone until next April, but that’s still double what it was last year. And the scheme has been criticised for applying to everyone, when the richest people may not even notice the impact but for the poorest it can mean the difference between breakfast and a warm shower.

So why not use Shell’s profits to help? £31bn would cover energy bills for the country’s poorest 12.4 million households. With an estimated 14 million in poverty across the country, helping people put their money back into the economy rather than the energy companies could be the boost to growth the Conservatives are looking for.

Kickstart the scheme to insulate homes across the country

Insulate Britain may have infuriated drivers and politicians with their protest tactics but it’s hard to deny the impact their messaging has had.

The need to better insulate homes across the country to keep energy bills (and costs) down is inescapable. All UK homes need to  be brought up to high standards of energy efficiency — proper insulation and heat pumps instead of gas boilers — by 2050 to meed the government’s net zero target of 2050. But it doesn’t come cheaply.

Retrofitting homes would cost an average of £26,000 per house, according to Labour’s analysis of work by the Climate Change Committee, which advises the government. And with 29 million homes in need of the work, the country needs to move at a rate of one million a year to hit that target.

That’s £26bn a year. Shell’s profits cover it with change to spare.

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Plug the £40bn hole in public finances

There is an estimated £40bn hole in public finances, , the Institute for Government warned this week, with chancellor Jeremy Hunt already warning government departments must “redouble their efforts to find savings” ahead of cuts that could see budgets to fall 8 per cent by 2026/27.

The trouble is a decade in austerity has not left much to cut. The think tank said measures used to cut spending in 2010 such as holding down public sector pay and cutting staff while pushing others to work harder is “not politically or practically viable” in times when inflation is soaring.

Shell’s £31bn in excess profits would go some way to plugging that hole and spare public sector pain at a time when nurses and teachers are considering strikes over pay

Public sector pay

Wages are lagging behind inflation, but it’s hitting the public sector hardest. Whereas pay in the private sector went up on average by 6.2 per cent in the 12 months to June 2022, those working in the public sector – nurses, paramedics, teachers, prison staff – on average got just 2.2 per cent rise, with inflation hitting over 10 per cent. 

Despite undertaking undoubtedly the hardest, most emotionally gruelling jobs during the pandemic and – literally – saving lives, NHS workers have seen little reward for their service. And they’ve had enough. Ballots for strike action are sweeping not just healthcare, but also education and transport, threatening to force already struggling essential services to skid to a halt. 

More than 115,000 NHS ambulance workers have started voting on whether to strike, while nurses, too, are voting on industrial action in the face of losing 500 nurses each week from the profession. In an unprecedented move, three of the major education unions will be balloting to go on strike, with the headteachers union NAHT balloting for the very first time. 

Around 5.7 million people are employed in the public sector at a total cost of roughly £240 billion, the Institute for Fiscal Studies (IFS) has estimated. To give every one of them a pay rise in line with inflation would cost £10bn, the think-tank calculated back in March. This would give an average pay rise of £1,750 for 5.7 million people.

However, this was when inflation was predicted to ​​average 6.2 per cent. It’s now hit a staggering 10.1 per cent, meaning even more money would be needed to offer an inflation-matching, or even busting, pay rise. Shell’s profits should cover it though.

Feed 1.6 million children on free school meals for 42 years

One free school meal costs the government £2.41, and a total of 1.6 million children are currently receiving free school meals. That means it costs £3,856,000 to pay for all these free school meals each day. With its profits from the last 12 months alone, Shell could pay that more than 8039 times over. Schools are only open for 190 days a year, so Shell could feed all children currently eligible for free school meals for over 42 years. 

Campaigners are calling for an urgent expansion of the free school meals scheme in the cost of living crisis. Currently, there are 800,000 children living in poverty who are not eligible for free school meals. Recent research shows that expanding the scheme to all children on universal credit could actually generate billions for the UK economy. 

In September, four million children went hungry because their families either couldn’t afford or couldn’t access the food they needed, according to the latest statistics from the Food Foundation. 

“The cost of living crisis is having an awful impact on children with many going hungry and not getting the nutrition they need to grow up healthily,” Anna Taylor, executive director at the Food Foundation, said. “We strongly urge the government to listen and urgently act to ensure that our children in need are guaranteed at least one nutritious meal a day at school.”

Increase benefits in line with inflation (with billions still to spare)

The government spent £237.3billion on social security benefits in 2021/2022. If it was to uprate benefits in line with inflation at its current rate – sticking to Rishi Sunak’s promise to ensure benefits claimants don’t have a real-terms cut to their income – it would cost the government just under £24billion. Shell’s profits from the last twelve months could easily cover this, and they’d still have a nice sum of £7billion to spare. 

Charities and experts have made desperate pleas with the government, urging them to uprate benefits in line with inflation. 

Ian Porter, senior policy advisor at the Joseph Rowntree Foundation, said a U-turn on the promise to increase benefits “will mean yet another devastating blow to the finances of people on the lowest incomes and will cause fear for millions who have spent the past months struggling to feed their families, cook hot food and heat their homes”. 

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