130 billion debt - Truss

[Stephthegreat]

Truss, misguided as she is, has announced a 130 billion bailout for the energy companies. Why saddle our dcs with this enormous debt because, let’s face it, it will be paid back down the line.

Truss completely ruled out a windfall tax.

What next? I fear for our country, we have just had one clown and now we have this no hoper.

This problem has been brewing for over 20 yrs and both main parties have just kicked the can down the round. Time to knock electric cars on the head ffs

time to nationalise key sectors of the uk economy as energy security can be used as a weapon. Also all of the major oil producing countries are run by despots

And a windfall tax would prevent massive borrowing that will take decades and a generation to pay for.

Will the energy companies really not invest if they are taxed? I can’t believe borrowing this much money is a good alternative.

Starmer is right- a windfall tax is the best option.

Thats a ridiculous over reaction.

But even if a WFT raised just £5 billion, thats 5 billion that can come off the national debt or go to NHS/Social Care.

Because the spending plans announced for the NHS is in tatters as inflation is 3x what is was when Sunak announced the extra spending, add in Truss is reversing the NI increase.

So a WFT can help bridge this gap - only a fool would rule out taxing excess profits caused by Putins war, many countries are doing similar.

OK, that might have been an overreaction, I accept that. I am just surprised to hear how many people consider the windfall tax some sort of an ultimate solution. The truth is that even all profits are taxed at 100% (not only extra gas profits, but business as usual, non gas etc too), that would barely touch the sides. Whilst there are various estimates of how much the rescue package will cost, I think the consensus is that it is between £100 and £200 bn.
As to the other countries, even those that passed windfall taxes are borrowing like there's no tomorrow. The UK is in a reasonably safe position compared to many, as at least there's some degree of energy self-sufficiency here.
I am not a big fan of Liz Truss or her government, but she's doing the only possible thing at the moment. I am concerned about the (visible at least) planning for medium term though.

You are being stupid.

Ok fair enough we are guilty of that at times :)

Germany's national debt is 65% of GDP, ours is 96% and this is before this 100 billion plus borrowing.
France and Italy above 100% of GDP.

Many other EU countries way lower.

As i understand it, the gas produced here is not for our exclusive use (in practice it is because we pay the global rate) if it were, we would control the price surely?

i think if there'd been no leadership contest, we'd have a different policy but with less than 3 weeks before the October price cap, she just hasn't the time to bring out a more considered & targeted policy.

Like you i worry about uncontrolled gas price increases and what happens in 18 months time.

Truss's biggest campaign donor £100,000 from wife of ex-BP executive. This was a 1/4 of her overall donations ! Good investment on the part of the donor

you could instead use the money for: Insulate every house in the UK for free

And how long would that take? not to mention the issue of the govt deciding that it has the right to decide what happens on my property - which is leasehold, another complication. We can't get the frigging landlord to paint the hall, you reckon they're going to do anything extensive?

And 'for free.' 😅All this material and work is going to just be available, is it?

"JauntyJinty
I'mnot sure if this is the best place toi put this but didn't seem woroth it's own thread!

My first thougth when they said that they would cap bills at £2500 was that I'll easy hit that - so won't everyone think the same and most people won't bother with what they've been doing to try to reduce energey usage? Everyones house will be toasty warm all winter safe in the knowledge they've hit the maximum spend anyway and the coutries energy usage will go through the roof? Or am I being really stupuid and missing some important detail?!"

+++++

This is why education and money spent on it is so important.

You are of course right that it would now be completely impossible to insulate ever home for free by the 1st October or to even get the materials to do so.

But this is a shining example of why our politicians should be of a quality and capability to have vision and to forward plan and not simply reacting to events.

The insulation of all homes and installation of domestic solar could have been substantially achieved over the last 7 to 10 years but politicians are driven by short term votes rather than what is in the future best interest of the country.

I'm so angry about this

Even more now it's going to be hidden behind the bigger news.

politicians are driven by short term votes rather than what is in the future best interest of the country

Exhibit A - pensions, an ageing population and a falling birth rate. The IFA who looks after my pensions says no govt has tackled that because in five years time it'll be another govt's problem.

Long term infrastructure projects are hard though also due to nimbyism

eg nuclear and rail

I'm sure you'd be perfectly happy to see your home halve in value/subside and/or have 15 years of construction traffic trundle by 24/7.

Easy to ask for other people to have their lives ruined whilst theirs isn't.

I sincerely hope the plan for multiple nuclear power stations doesn't happen, nuclear should be built, as it is at present, on existing sites.

ukenergysavingnetwork.co.uk/eco-landing/?gclid=Cj0KCQjwyOuYBhCGARIsAIdGQROfPNNY3_HaVL36-0tiBwgEw50EHNh2ckJmZnu9RoRlb_bfZ2mz7iUaAiRZEALw_wcB

ECO4 is underway. There have always been funding initiatives to improve energy efficiency in UK homes and tackle fuel poverty by targeting homes that struggle to pay their heating bills.

Starmer is lying.

The bulk of the profits being talked about are made by non-UK companies that cannot be taxed in the UK.

The government imposed a windfall tax earlier this year. It is called a temporary targeted energy profits levy. It is charged on the profits of oil and gas companies. This took the tax rate paid by these companies from 40% to 65%. How much higher do people think we can go?

Part of the problem is that people equate profits with money going to shareholders and highly paid executives. The vast majority of profits are actually reinvested in the business to fund improvements. You ask "will the energy companies really not invest if they are taxed". The answer is clearly yes as a windfall tax would take away the money they would invest.

Even if you were willing to accept the long-term damage that taxing these companies at 100% would do, you would raise at most £27bn by doing so. That wouldn't even fund the support the government is offering. Starmer's suggestion that a windfall tax on its own would provide enough money to keep energy bills the same is either wildly uninformed or a straight lie. It is as disingenuous as Boris' lie that leaving the EU would provide the money to increase NHS spending by £350M per week.

ROME, Sept 9 (Reuters) - Italy has collected only around 2 billion euros ($2 billion) from a contested windfall tax on energy companies, leaving the Treasury facing a potential multi-billion revenue shortfall, two government sources told Reuters on Friday.

www.reuters.com/markets/europe/italy-collects-around-2-billion-energy-windfall-tax-sources-say-2022-09-09/

The figure I saw is £8bn from another WFT so not close to where it needs to be

Plus the downside which is now being picked up in financial press due to recent press release from OEUK

Not sure if Starmer is lying, maybe, but he is playing to the crowd politically on something he has no chance of implementing or overseeing downside for

It’s never that simple in real life. Previous schemes to subsidise the installation of insulation in homes have resulted in some homes ending up with rotting roof beams and serious mould and decay problems - because it’s not just honest, trustworthy and competent businesses that take government money to offer insulation to householders. If a house was not designed to be heavily insulated, it is neither cheap nor even always feasible, to shove in a load of insulation. I find it immensely aggravating when people make throw away comments about how we should just insulate everything - yeah, right, like we should have been shoving cheap cladding on high rise towers for years, and all sorts of other great ideas that solve one problem and cause umpteen others.

Part of the problem is that people equate profits with money going to shareholders and highly paid executives. The vast majority of profits are actually reinvested in the business to fund improvements. You ask "will the energy companies really not invest if they are taxed". The answer is clearly yes as a windfall tax would take away the money they would invest.

Part of the problem is people not understanding taxable profit.

(and ignoring super-deductions and other generous tax breaks/reliefs the oil and gas sector has benefitted from and continues to benefit from that reduce the tax they pay by billions)

Starmer's suggestion that a windfall tax on its own would provide enough money to keep energy bills the same is either wildly uninformed or a straight lie. It is as disingenuous as Boris' lie that leaving the EU would provide the money to increase NHS spending by £350M per week.

Actually if he did suggest this I agree with you, and it’s a good comparison

It works on an emotional level in same way but not based on reality

Starmer's suggestion that a windfall tax on its own would provide enough money to keep energy bills the same is either wildly uninformed or a straight lie. It is as disingenuous as Boris' lie that leaving the EU would provide the money to increase NHS spending by £350M per week.

Now you re the one lying... absolutely no comparison at all, can't believe people are so easily misled and can't do a little basic reading.

Stopping energy bills from rising is a fully-funded measure. We’d pay for that in three ways:
First, with increased tax revenues from oil and gas producers. Labour would close the Government’s absurd loophole in their Energy profits levy, backdate the start date to when Labour first called for a windfall tax to January, and accounting for higher gas and oil prices, would raise £8bn
Second, we would use the already-pledged £14bn of non-targeted funding to prevent bills from rising, giving people the security to plan ahead, rather than giving that money back in hand-outs later on
Finally, by keeping energy bills down, we’ll reduce the rate of inflation, leading to a reduction in government debt interest payments of £7bn. That’s because higher inflation increases government expenditure – or ‘coupon payments’ – on gilts, which is how a significant proportion of government debt is held

With regard to high borrowing and low tax - this is all just part of the general trend of bankrupting democratic countries and privatising power, so that we can all ultimately be governed and controlled by the kleptocrats, dictators, global corporations and hedge fund managers who actually hold the money and the power. The UK has been an enthusiastic facilitator of money laundering and tax evasion for decades, hidden behind low regulation, “data protection,” trusts, shell companies, blind eyes, property portfolios, Brexit (the EU inconveniently wanted to start introducing more controls over this sort of behaviour), and tax havens in British overseas territories. So why stop now? It’s not as if we can attract businesses with the promise of good infrastructure, law and order, healthcare and well funded education any more, as all that is under threat of collapse and already run down.

So what’s left, besides low tax? Even our legal system is a busted flush, unless you’re an oligarch not currently too closely connected to Putin. Not much works for “the people” any more (even our barristers are striking) - it is all at the disposal of the global elite, not so much to serve the people who actually live and pay tax here. Why not keep borrowing for a while longer, to keep people quiet until the takeover is complete and democracy pointless because we’re merely voting for new puppets, but can’t actually change the puppet masters?

Alexandra2001
can't believe people are so easily misled and can't do a little basic reading
*
Definitely says £8bn here;
Labour first called for a windfall tax to January, and accounting for higher gas and oil prices, would raise £8bn

Where's this money coming from?
we would use the already-pledged £14bn of non-targeted funding to prevent bills from rising

Not to mention that Labour's energy plan is only a 6 month plan, calculated up to April 2023.

fully-funded measure

Labour’s £29 billion energy bills plan [calculated to end March 2023] would not fully cover the expected rise in the energy price cap, because it doesn’t take account of most customers’ higher gas and electricity consumption during the winter.
Freezing the price cap would cost consumers, energy companies or the government around £8 billion more than Labour says in its plans, according to the Institute for Fiscal Studies (IFS), which analysed the figures after discussion with Full Fact.
Our own analysis suggests that Labour’s plan contains a shortfall of around £5 billion for direct debit customers alone, and an additional shortfall for other types of customer.

fullfact.org/economy/labour-energy-bills-seasonal-consumption/