The Government, NOT Energy Companies is Raking It In!

Antony Nailer • 24 August 2022

Antony Nailer explains why the government should be blamed for excessive profiteering, rather than power companies

The headline claims of profiteering by the energy companies is stoked by the government hoping to impose a windfall tax, eagerly reported by the newspapers and left-wing TV as giving billions of pounds to greedy shareholders, instead of lowering bills.

They recently attacked the profit by Centrica, the owner of British Gas, of £1.2b in the year to April 2021 alone, since then energy prices have gone through the roof and future profit will be even higher.

Steady on now. Centrica has to import a huge amount of gas from Norway and Europe and pay wholesale price, which has jumped. So, they apparently have made a significant increase in profit to April 2022, and even more since then as gas prices keep rising.

This means a higher turnover, with higher costs, and higher net profit. If we now look at the turnover for the year to April 2021 it was £18,300 million, with a net profit of £1,210 million, so the profit on turnover was 1210 x 100 / 18300 = 6.6%. That is not an obscene amount of profit.

Shareholders are always blamed for profiteering at the expense of non-shareholding people.

Shareholders risk their money to earn income and it isn’t all sweetness and light. Share values go up and down and annual dividends vary enormously.

I bought over £7000 worth of Centrica shares in late 2015 and had dividends totalling £1370 over the next 5 years. During that time and with the constant negative press against electricity generation using gas, the share value fell sharply. When there was no first dividend in 2021, I sold the shares at a loss of over £4500. So much for greedy shareholders.

I have a number of shares in different companies, and some do well and others not and it is always a balance between share value and dividend. Overall, my dividends for the year to April 2021 averaged out at 3.55% of the value of the shares. That’s not greed it is however a lot better than below 1% interest offered on savings by the banks.

So don’t accept government and MSM blame on apparently huge profit numbers but calculate what that is in terms of turnover. If it is well under 10% of turnover, that is not excessive and out of that profit they have to pay a proportion in dividends.

Always remember that the government is getting 20% in Corporation Tax and that is linked to profit. It’s the government who is raking it in, not the companies.

UKIP supports free enterprise, regardless how the businesses have to raise money, either from the banks, or from share investors.

Antony Nailer

UK Independence Party - Spokesman for Energy, Environment, Transport, & Treasury

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