Green Scandal: Wind Farms, Subsidies And Tax Avoidance
It looks as if the Coalition is knowingly depriving the Treasury of enormous tax receipts in order to promote ugly and inefficient wind farms already in receipt of enormous government subsidies.
The energy companies are as avaricious, selfish and remote as were the big banks before the crash. Arguably, they are even worse.
Without any apparent restraint from the Government — or are they encouraged? — they have continued to increase their prices during an economic downturn. According to the industry regulator Ofgem, the profits of the big six energy suppliers will reach £100 per household over the next 12 months.
While much of the rest of the country is mired in recession, it’s boom-time for the energy giants. They have increased their profit margins from 3.3 per cent in 2011 to 7 per cent a mere two years later.
During this time of falling incomes, an average dual-fuel domestic bill — for gas and electricity — has risen from £1,095 to £1,352.
Now an even bigger scam emerges. On Tuesday, the Commons Energy and Climate Change Committee learned that the energy giant npower has not paid any UK corporation tax for three years, despite making £766 million in profits during 2009 to 2011. These profits could have generated a tax bill of £200 million for RWE, its German parent company.
The other energy suppliers have generously paid some corporation tax, though in each case — except that of Centrica, which owns British Gas — at significantly below the lowest rate of 20 per cent.
Scottish Power stumped up £102 million in 2012 on profits of £1.2 billion. German-owned E.ON paid £532 million on profits of nearly £5 billion. French-owned EDF paid ‘more than £200 million’ last year on annual profits of £1.7 billion.
How is it that these companies, seemingly perfectly legally, can avoid paying corporation tax at the same levels as other companies? I say ‘other companies’, though there are several foreign-owned multi-nationals, such as Amazon, Google and Starbucks, which also appear to have an aversion to paying corporation tax here.
The answer in the case of the energy giants would seem to be that they have cut a deal with the Government and the Inland Revenue. That, at any rate, was the justification offered to the Commons Select Committee on Tuesday by Paul Massara, chief executive of npower.
He defended his company’s non-payment of corporation tax on the grounds that it had set the cost of building wind farms and other power-generating facilities against its tax liability. He claimed npower has ‘been the biggest investor by miles in the renewable off-shore business’.
So IF this is true, the Coalition is knowingly depriving the Treasury of enormous tax receipts — when there is a desperate need to balance the books — in order to promote ugly and inefficient wind farms already in receipt of enormous government subsidies. [...]
No one disputes that energy costs have risen, but the suppliers almost invariably pass on these costs to the consumer at once — and then add a bit more.
Meanwhile, the Government allows them to escape corporation tax or invites them to pay it at a much reduced rate. But the poor consumer is charged an extra 10 per cent on his monthly bill in green taxes.
These taxes amount to £112 a year and are projected by the Department of Energy and Climate Change to increase to £286 a year by 2020. We shouldn’t be surprised if they are a lot higher.
In other words, the energy companies are making hay while the extra burden falls on the poor consumer. The suppliers either don’t pay tax or pay as little of it as possible, while we are expected to contribute to their increased profits and subsidise their uneconomic investment. It is insane.
And I haven’t even mentioned the other insanity — of closing down perfectly serviceable coal-fired power stations as a result of absurd European Union diktats on climate change. It is possible that we may not be left with enough capacity to stop the lights going out in the next few years.
Nor has this Government or its predecessor shown any urgency in adopting a plan to replace our ageing nuclear power stations. It finds itself with a single remaining potential partner in French government-controlled EDF, with which it may well be unable to strike a satisfactory deal. [...]
A further problem has been a Department of Energy and Climate Change (led first by one Lib Dem, Chris Huhne, and now another, Ed Davey) obsessed with renewable energy, despite its high cost and very marginal usefulness, and happy to pile extra green taxes on already hard-pressed consumers.
I wonder whether David Cameron fully grasps the growing resentment of people who watch the energy companies lining their pockets while those consumers have to pay more and more. All of us know that our ever-growing bills reflect far more than the rising costs of energy.
If Labour were not itself even more blindly in love with renewable energy, and more than a little responsible for our existing predicament, it might have the gumption to mount a compelling case against the Coalition over its disastrous policies.
But I don’t think Mr Cameron should feel too relaxed. The energy giants are every bit as bad as the banks. And the truth is that this Government is in cahoots with them.