Ex Welsh MP calls for new windfall tax to keep energy bills down

Martin Shipton

A former Welsh Labour MP has called for an additional windfall tax on companies making huge profits from the war on Iran.

In a Facebook post, Geraint Davies, who was the MP for Swansea West from 2010 to 2024, wrote: “We need added windfall tax on oil giants profiteering from Trump bombing Iran, as they did from Putin invading Ukraine, to help the cost of living crisis.

“As people die from the Iran war, BP’s underlying profits hit £2.366bn. It more than doubled at +237% yet its effective tax rate on profits was 43%, compared with 69% for the same period in 2025.

“The UK Government should immediately impose an increased windfall tax on oil giants who are profiting from war and creating climate change that is destroying our planet.

“In fact the government is paying billions for carbon capture research to allow more oil drilling. The oil giants should pay for the research so the government money can support green energy production.

“Meanwhile Trump proclaims ‘drill baby drill’ and is pumping up oil profits with his illegal bombardment of Iran while his Nigel Farage Reform cheerleaders in Wales are gathering votes. You couldn’t make it up.”

Environmental groups were sharply critical of BP’s latest results.

Mike Childs, head of science, policy and research at Friends of the Earth, said: “Just as we saw in 2022 following Russia’s invasion of Ukraine, fossil fuel giants are quids-in when global instability drastically inflates fuel prices.

“But again, it’s ordinary people who pay the price when soaring energy prices threaten to plunge the UK into an even deeper cost of living crisis.”

He added the UK needed to reduce its vulnerability to energy price shocks by increasing investment in renewable energy, as well as providing support for energy efficiency measures.

Gas and electricity bills for most UK households are protected at present by the energy price cap. Until June 30, the typical annual bill for dual-fuel households who pay by direct debit will be £1,641.

However, the jump in wholesale oil and gas prices since the Iran war began means the cap is currently estimated to rise by about £200 when it is revised in July.

Sharp swings

The oil price has seen sharp swings since the start of the US-Israel war with Iran as the key Strait of Hormuz – which usually carries about 20% of the global supplies of oil and liquid natural gas – has been effectively closed.

Before the conflict began, the price of Brent crude, the global benchmark for oil prices, was around $73 a barrel.

Since then, oil has risen to nearly $120 at one point, but it has also fallen below $100 as speculation has swirled over when the Strait of Hormuz will reopen. Brent currently stands at about $110 a barrel.

This volatility widens the gap between buying and selling prices, which typically enables traders to make bigger profits.Profits in BP’s customers and products division, which includes its oil trading unit, surged to $2.5bn compared with just $103m a year ago.

Energy Profits Levy

Chancellor Rachel Reeves said the performance of energy companies was “exactly why we extended the Energy Profits Levy to make sure that windfall profits could be taxed appropriately”.

“BP and other oil and gas companies play a really important part in our energy mix,” Reeves told the Commons, but she said it was important that windfall taxes are set “properly”.

Energy firms operating in the UK are subject to a windfall tax, called the Energy Profits Levy, that was introduced in 2022 as a response to soaring profits following Russia’s full-scale invasion of Ukraine. Labour extended the life of the tax to March 2030.

However, the levy only applies to profits made from extracting oil and gas in the UK, whereas the bulk of energy giants’ earnings are made overseas.