It’s important that Tesco’s chair has backed a windfall tax – just look at Centrica’s profit targets

John Allan’s intervention came on the same day Centrica issued its latest trading update. The company is flying and appears to be trying to hold the line on a tax proposal that is both popular and looking increasingly like an inevitability, writes James Moore

The Tesco chair, John Allan (Getty)

Tesco chair John Allan is about as far from a radical as it is possible to get.

In addition to sitting in the big seat at UK’s biggest supermarket, he chairs housebuilder Barratt and Imperial College’s council. He’s sat on so many boards during his distinguished career he’s probably got a special vanity box back home to hold all the corporate tie pins he’s picked up. All that and a recent stint as president of the Confederation of British Industry to boot.

When a pillar of the business establishment like this calls for a windfall tax on energy companies – Allan said there was “an overwhelming case” for it in a BBC interview – it grabs the attention. (He also took a shot at the chancellor, Rishi Sunak’s national insurance rise: “I wouldn’t have done it”. Oof.

We often see business leaders as greedy and out of touch. I’m afraid that is because some of them are. However, there is also a sizeable number who recognise that business is part of society and that they have a wider role to play in it (rather than Milton Friedman’s contention that their sole purpose should be to increase profits).

“I was hearing for the first time for many years of customers saying to checkout staff: ‘Stop when you get to £40’, or something,” Allan said. “They don’t want to spend a penny over that, as opposed to having everything checked out.”

Britain, he warned, is seeing “real food poverty” for the first time in a generation.

Actually, it’s been with us for a while, as those of us who’ve been keeping an eye on the food bank movement are well aware. But we’ll put that to one side, because Allan is right with his diagnosis and right with his treatment for it (the tax).

His intervention came on the day Centrica - which owns British Gas - issued a trading statement underlining the point. It’s profits are expected to hit the company’s top targets.

It’s party time in energy country. By the way, did I mention that this is the same British Gas the GMB union said indulged in the fire and rehire tactic that blights British business and ought to have been outlawed by now, except, as I wrote yesterday, the government has broken its repeated promise to bring forward an employment bill. I think we should bear this in mind.

Centrica appears to be aware that it has a problem on its hands. If you watch YouTube for long enough you can’t fail to come across one of its ads extolling its virtues as a corporate cuddle-bunny.

Then there was this line in the trading statement: “We are investing over £50m in supporting our customers with 500 additional UK based customer service roles in British Gas Energy, 1,000 new UK engineering apprenticeships, and the British Gas Energy Support Fund which provides grants of up to £750 to help customers pay their energy bills.”

If those new employees are interested in maintaining their terms of employment they would be smart to get on the phone to the GMB, which managed to secure improvements to what British Gas was trying to impose on around 7,000 engineers.

The big numbers in the release were otherwise designed to send out a message: “We care.” At least about our customers. A lot of whom may soon find themselves in default.

This sort of thing isn’t often found in a trading update, because the City, its scribblers and its investors are the main audience for these terse financial statements (Centrica’s tells us its profits are going to come in at the top of expectations and the stock market took note). The fluffy stuff tends to be held back for annual results statements or reports.

But Centrica knows it has a problem. The other energy giants are in the same boat. The windfall tax is populist and popular. It makes sense given the fuel and food poverty stalking Britain. The winter will be more than cold for some.

Given the money the energy sector is making, and showering on shareholders, there is ample room for a levy designed to stave off the worst of the cost of living crisis for those at the sharpest end of it.

Soaring energy prices aren’t the only pressure point squeezing Allan’s customers. Food price inflation is a reality too. Prices are rising across the board. But fuel undoubtedly represents the biggest hit to household budgets.

The government is, so far, continuing to sit on its hands. There were no welcome surprises in the Queen’s Speech. But Rishi Sunak has at least hinted at the possibility that this could change. If more like Allan get on board then it will, however much Centrica spends on YouTube campaigns.