Iran war profits should help with the cost of living, says UK civil society

Leading UK civil society organisations have called on the Chancellor to increase levies on corporate profits to help address the cost of living crisis. This follows predictions that numerous sectors will make huge profits from the economic fallout of the US-Israeli war on Iran.

War with Iran set to increase household bills

In a joint letter to Keir Starmer and Rachel Reeves, 40 organisations are urging the government to take action and curb profiteering.

The signatories represent organisations across various sectors, demonstrating the breadth and depth of support for action to tackle corporate profiteering and the affordability crisis. They include the Cost of Living Action coalition, Global Witness, Women’s Budget Group, National Education Union, New Economics Foundation, Patriotic Millionaires UK, and many more.

The signatories say that the Iran war crisis should be a “turning point for the UK” as “energy bills, fuel costs, and essentials are set to increase in costs for households and businesses already struggling with affordability after years of a cost of living crisis”.

The letter goes on to say that “It is not right that extraordinary profits, generated off the backs of ordinary people during periods of crisis, are siphoned off into private hands and corporate bank accounts.” The letter also notes that the government’s own cost of living champion has called for measures to prevent profiteering.

Faiza Shaheen, executive director of Tax Justice UK, said:

Too often UK governments have failed to protect households and small businesses from the profiteering corporates and super-rich individuals who circle around crises like vultures. Spain has already frozen rents, yet our government fails to show urgency. The Chancellor needs to get a grip on the situation to help people already struggling, and show that this will not be yet another crisis where the rich get richer, while everyone else foots the bill.

Profits increase across sectors

New data recently released suggests that North Sea energy firms are already set to make extra profits.

Areeba Hamid, Co-Executive Director of Greenpeace UK, said:

The oil-majors are set to make gargantuan profits from global instability while ordinary people pay the price of Trump’s war in Iran. Calls to scrap the windfall tax early are not just misguided—they are a slap in the face to people struggling with rising energy costs, and more drilling in UK waters won’t cut bills or protect UK households. The fossil fuel industry should be contributing more tax, not less.

Banks and mortgage providers will also increase revenue as a result of increased mortgage costs. Meanwhile, costs for agricultural inputs have risen extraordinarily. Defense contractors have already posted record revenues recently.

It is not the first time these sectors have profited from crises. The letter notes that previous moments, like the Covid-19 pandemic and invasion of Ukraine, “saw the wealthiest households and super-rich amass even greater fortunes … while millions were left struggling.”

Simon Francis, Coordinator of End Fuel Poverty Coalition, said:

Gas prices have more than doubled since late February, and households are already struggling with energy bills that have been stuck at elevated levels for five years. The latest global disruption is a stark reminder of the cost of our dependence on imported fossil fuels. Every time conflict or instability strikes overseas, ordinary households pay the price through their energy bills.

The Government must act urgently to protect households from the impact of rising prices and ensure that the billions in excess profits energy companies are making during this crisis are redirected to support the people who need it most. Wiping out household energy debt, strengthening the Warm Home Discount and accelerating investment in home insulation would all help cushion the blow.

New policies needed

The policies put forward by the organisations are a strengthening of the existing energy profits levy on North Sea oil and gas companies. They are also calling for a new levy on UK bank profits made from the British public.

Additionally, excess profits taxes are specifically called for on industries such as defense, big agribusiness, and associated artificial intelligence and big tech firms, which are predicted to make bumper profits as a direct result of the war on Iran.

As well as providing direct cost of living support, they propose the tax revenue is used to invest in the long-term resilience of the UK economy. This will make the economy less susceptible to fuel price shocks in the future.

Featured image via the Canary