Centrica profits "undeserved” says IPPR

16 Feb 2023 02:39 PM

The UK’s leading progressive thinktank, IPPR, has responded to the announcement that Centrica has made £3.3 billion in profits in 2022 (up 350% since 2021) and announced a new round of share buybacks totalling £300 million.  

Dr George Dibb, head of the Centre for Economic Justice at IPPR, said: 

”These scandalous profits are undeserved and come directly from the pocket of bill-payers. We all know that wholesale energy prices have been sky-high for the past year, but that’s no reason that gas suppliers should be making higher profits on the back of higher bills. These profits, which are then being transferred directly to shareholders via buybacks and dividends, are a direct transfer away from bill-payers during a cost of living crisis. It is time to introduce a tax on share buybacks and use those revenues to support public services.” 

A recent report published by IPPR and Common Wealth argued that share buybacks are a direct cash transfer away from households struggling to pay bills, via energy company profits, to already-wealthy shareholders. The report, Buy Back Better, contained the following analysis: 

• Share buybacks channel profits from companies to shareholders by increasing the value of shareholders’ stock. 
• FTSE 100 companies have announced £55 billion of share buybacks in 2022. 
• President Biden has recently introduced a 1 per cent tax on share buybacks to help alleviate the cost-of-living crisis in America and has proposed increasing that to 4 per cent. 
• A 25 per cent tax on share buy backs could raise £13.5 billion a year.