Energy Profits Levy

Debate between Baroness Sheehan and Baroness Penn

Tuesday 9th May 2023 Lords Chamber

[Baroness Penn (Con)]

On the noble Lord’s first point, he is right that the energy profits levy is applied to profits made in the UK or on the UK continental shelf. That is in line with other profit-based taxes on companies that operate in the UK and overseas. On the difference between the energy profits levy and the electricity generator levy, they are structured in completely different ways. The headline rates of those two taxes are also completely different. We have different programmes in place to ensure that we incentivise continuing investment in our renewables, which is why we have such a great track record on delivering renewable energy in the UK.

[Baroness Sheehan (LD)]

My Lords, one of the peculiarities between the energy profits levy and the electricity generator levy is the huge difference in tax relief—80% and 0% respectively, as the noble Lord, Lord McNicol, alluded to. So why this preferential treatment for the oil and gas sector? It is not as though we need new sources of fossil fuels for domestic use—or are the IEA, the IPCC, the vast bulk of UK scientists and the Government’s own net zero tsar, Chris Skidmore, wrong on this?

[Baroness Penn (Con)]

My Lords, I disagree with the noble Baroness that there is preferential treatment for the oil and gas sector, which faces a far higher tax rate based on the extraordinary profits it is benefiting from. That is entirely appropriate. On the investment incentive, we will continue to need oil and gas as we transition to net zero. We need to encourage investment into UK oil and gas fields to help meet that demand, and that is something the Government will continue to do.

Financial Services and Markets Bill

Debate between Baroness Sheehan and Baroness Penn

Committee stage
Tuesday 7th March 2023 Grand Committee

[Baroness Penn (Con)]

My Lords, I welcome this chance to continue this Committee’s important debate on amendments concerning green finance. As I stated in a previous Committee session, the Government are committed to fostering sustainable finance in the UK and will shortly publish an updated green finance strategy to that effect.

I will speak first to Amendment 168 from the noble Baroness, Lady Worthington. It is of course correct that all models have their limitations in depicting the real world but the Bank of England’s models have considered the views of experts in the field; they therefore do not need to be directed to do so. The scenarios used in the climate biennial exploratory scenario, or CBES, were formed by the Network for Greening the Financial System, an international network of central banks in which the Bank of England plays a prominent role. The scenarios have been produced in partnership with leading climate scientists, leveraging climate-economy models that have been widely used to inform policymakers—not to mention being used by and continuing to be used by the Intergovernmental Panel on Climate Change. These scenarios are updated continually by the Network for Greening the Financial System, which also ran a public survey welcoming feedback on its most recent iteration of climate scenarios.

It is also not the case that CBES is the PRA’s only tool to manage climate risk. It is actively using its position as a supervisor to ensure that firms are not materially undercapitalised for climate risks, setting out its expectations in its supervisory statement published in 2019. Furthermore, the PRA is an active member of two of the leading international standard setters: the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors. The Bank is actively participating in both forums to ensure that the regulatory frameworks for the banking and insurance sectors address potential gaps in the management of climate-related financial risks. This work will flow through to our domestic framework and at the same time ensure international co-operation on what is fundamentally a global issue.

I now turn to Amendment 199 in the name of my noble friend Lord Randall of Uxbridge, which is supported by other noble Lords in this Committee. The Government agree that the financing of illegal deforestation is a serious global issue that must be tackled. However, this amendment would involve implementing a new and untested regulation that would impose a broad supply chain rule on all regulated financial services firms. It would currently be very difficult, time-consuming and expensive for UK financial services firms to ascertain whether firms or products that they invest in are exposed to forest risk commodities in compliance with local laws.

In introducing this amendment, the noble Baroness, Lady Boycott, referred to the provisions in the Environment Act 2021. These provisions will apply to the supply chains of large UK corporates. However, UK-based banks and fund managers engage in lending and investment activities with companies in jurisdictions across the globe, not just commercial activity in the UK. There are currently no consistent, equivalent disclosure requirements to those that will be set out under the Environment Act 2021 in jurisdictions across the globe. Given that, capturing the activity of all of their customers and supply chains would not be as simple as adding an extra stage of disclosure to the regime set out in the Environment Act 2021, as had been suggested. However, I assure noble Lords that the Government are committed to addressing this issue and will work with the financial services sector and those with expertise in tackling deforestation to consider how we can make further progress.

[Baroness Sheehan (LD)]

Before the Minister moves on to another amendment, I put a question to her on Amendment 199 on deforestation. I hope she is coming to answer it.

[Baroness Penn (Con)]

Not just yet. Was it about the letter?

[Baroness Sheehan (LD)]

The question was about the regulations under Section 17 of the Environment Act 2021 that are supposed to be forthcoming. I asked the Minister when she thought they might be ready.

[Baroness Penn (Con)]

I will have to get back to the Committee on that point. I had picked up the noble Baroness’s other point, which was also referenced by the noble Lord, Lord Tunnicliffe, on the letter from Sir Ian Cheshire on this issue. I looked closely at his report and the recommendations in it. I am happy to place a copy of that letter and my response to it in the Library so that all noble Lords have access to them.

I was going to add something about the importance, in seeking to address this issue, of co-ordinating action internationally. This is necessary to reduce the financing of illegal deforestation and not simply drive it into other jurisdictions.

The noble Lord, Lord Tunnicliffe, referenced the work by Sir Ian Cheshire’s task force and its references to the Taskforce on Nature-related Financial Disclosures, the TNFD. The Government accept that that will not solve this problem on its own but it is important to recognise it as an important building block in creating an international solution. As I have pointed out, other jurisdictions do not have disclosure regimes. The TNFD is an attempt to create a global standard on nature-related disclosures that could be an ingredient in making progress in this area. The UK is the largest financial backer of the TNFD. We support its work to develop a global framework for reporting on nature-related impacts, dependencies and risks, within which deforestation is being considered. Once the task force launches its final recommendations in September 2023, the Government will consider bringing these standards into the UK disclosure framework.

Finally, on deforestation, in response to Sir Ian and the noble Lords who raised it today, as I set out, we are looking at what we can do further in this area. If noble Lords would like to meet to take those discussions forward, I would be very happy to do that.

[Baroness Sheehan (LD)]

Before the Minister moves on, could I reiterate the strength of feeling across the Committee on deforestation? It is not just about the 12% of global carbon dioxide that is released by burning and cutting down forests; it is also about the destruction of the carbon sink. It is a double whammy. This is an issue that we can and must solve. We have a report by the Government’s own appointed head of the GRI, Sir Ian Cheshire, who clearly lays out how we move forward on this. I wonder why the Government will not accept the findings of their own reports.

[Baroness Penn (Con)]

I say to the noble Baroness that I absolutely agree. I appreciate the point that the issues concerning deforestation are about not just nature and biodiversity but our ability to tackle climate change. That is why we are such strong supporters of the TNFD’s work, for example. She mentioned Sir Ian Cheshire’s report. I said to the Committee that I have read that report and looked at it very carefully. I do not think that we are in disagreement in wanting to find solutions to this problem. Sir Ian’s report also sets out that work needs to be done to ensure that the solutions that we identify are effective. For example, he refers to ongoing work in other jurisdictions such as the EU and the US on disclosures that would be building blocks towards making the progress that we all want to make. The Government do want to make further progress on this issue and I understand the strength of feeling, so I commit to this Committee to take those discussions further and see where we can build consensus on it.

[Baroness Sheehan (LD)]

I thank the Minister. On behalf of the noble Lord, Lord Randall, I accept the meeting. I know that he cannot be with us today, sadly. The final point that I leave with the Minister is that Sir Ian Cheshire was very clear in his letter about why he thought the UK should be acting. It is because, as a financial sector, we really matter. We may have 1% of the global emissions footprint but, in terms of the deforestation footprint and the money that passes through London, it is substantial.

Financial Services and Markets Bill

Debate between Baroness Sheehan and Baroness Penn

Committee stage
Wednesday 1st March 2023 Grand Committee

[Baroness Penn (Con)]

You should finish.

[Baroness Sheehan (LD)]

Thank you. I come to Amendment 232 in my name on green savings bonds. My reason for tabling this amendment is to draw attention to the success of the National Savings and Investments green savings bonds, which are an important part of the green finance landscape. Really it is a pat on the back for the Government—much-needed, maybe —so the Minister should view this as an opportunity for the Government to congratulate themselves. For me, it is an opportunity to ask them what more they can do to raise awareness of these bonds and promote them more aggressively. After all, the Climate Change Committee identified public engagement and behaviour change as major elements in the success of measures to keep the planet in a fit state for future generations, but many people complain that knowing what to do for the best is confusing. These bonds represent a safe way of putting their money to work for the benefit of all our futures.

Here is the background. The NS&I’s new green savings bonds became available from 22 October 2021, introduced by the then Chancellor, Rishi Sunak. They pay a fixed rate of interest over a three-year fixed term, and the current rate is 4.2%. The minimum deposit is £100 and the maximum is £100,000 per person. NS&I’s savings accounts are long-standing, recognisable and safe. They are hugely popular with UK savers, not least because investments are totally safe, being 100% backed by the Treasury. There is not the usual limit of £85,000 that there is with providers covered by the Financial Services Compensation Scheme. Many savers want to make green and ethical investment choices. Work by the Cambridge Institute for Sustainability Leadership found that the median saver would prefer a sustainable fund, even if they have to sacrifice up to 2.5% returns.

Money saved with NS&I’s green savings bonds is used to fund six types of green projects: making transport cleaner; switching to renewable energy; improving energy efficiency; pollution prevention and control; protecting living and natural resources; and adapting to climate change. These projects are publicised and clearly audited for climate and nature benefits. Another benefit is that raising funds through NS&I can actually give greater financial stability than raising funds on the financial markets. During the meltdown in borrowing costs following the botched “fiscal event” in September last year, investors in NS&I did not dump their bonds because they could not do so; there was no panic in NS&I’s offices in Blackpool, Glasgow, Birkenhead and Durham—please note, none in the south-east—because the bonds are not transferable. Further, when a larger amount of a Government’s debt is held by their citizens, it is less prone to volatility. There is lots to like about the products. There are few cash-based green savings products in the market, especially ones with such a high level of transparency about their use of proceeds.

My amendment is intended to put in the public domain at regular intervals the contribution made by the NS&I’s green bonds and the like towards UK green financing and the consequent reduction in targeted greenhouse gas emissions. It is worded in such a way as not to make proposals over the amount of government borrowing or how they should raise taxes, only to seek information on how the Government are raising funds for green investment. It would be helpful if the Minister could say how much has been raised through the Government’s green bonds to date, how much is forecast to be raised annually in future and what the Government’s ambition is for their future, including in relation to the promotion of these products.

Energy Profits Levy

Debate between Baroness Sheehan and Baroness Penn

Tuesday 7th February 2023 Lords Chamber

[Baroness Penn (Con)]

I am sure the noble Lord would not want to conflate the global profits of those firms with the profits they have derived from their UK oil and gas production. As I have said, those are subject to a tax of 75%. We expect the combined tax take from North Sea oil to be £80 billion over the coming years. We think it is right that we have the investment allowance. The sector is made up of many different players and supports 117,000 jobs, around a third of which are in Scotland—jobs I would have thought Labour would want to support.

[Baroness Sheehan (LD)]

My Lords, the US Inflation Reduction Act offers $216 billion of tax credits to green investments in energy and transport, and the EU will make a similar offering. In contrast, we now have an inexplicable regime, with 91% investment relief for oil and gas companies and zero investment relief for clean power generators. Why is UK green investment being shackled?

[Baroness Penn (Con)]

I simply cannot agree with the noble Baroness’s interpretation of things. Many renewable electricity generators generate their electricity under contracts for difference, to which that regime does not apply. It applies only to exceptional profits related to the price of gas, and is nothing to do with the cost of investing in renewables. I can agree with the noble Baroness on the importance of investing in renewables, something on which we have a consistent track record. We have the largest wind capacity in Europe, and we are the second-largest deployer globally, behind only China. We have a lot more to do, but we have a strong track record on which to build.

Investments: Environmental, Social and Governance Criteria

Debate between Baroness Sheehan and Baroness Penn

Wednesday 2nd March 2022 Lords Chamber

[Baroness Penn (Con)]

Yes, I agree with the noble Baroness on that point. I think the approach that the UK has taken to date to this whole area meets that test and will continue to do so.

[Baroness Sheehan (LD)]

The director of the think tank InfluenceMap said about the same FT article to which the noble Baroness, Lady Bennett, referred, that if you label something that invests in fossil fuels “sustainable”, and there is a whole body of scientific opinion that new gas, oil and coal production is incompatible with net-zero targets, there is probably quite a good chance that the fund is being mis-sold in some way. Does the Minister agree that a legal definition of greenwashing is urgently needed to prevent mis-selling of financial products?

[Baroness Penn (Con)]

My Lords, I do not think we will be taking quite that approach to a legal definition of greenwashing. We will, through the green taxonomy, provide a clear way by which firms are transparent and what counts towards their sustainability claims, accompanied by regulation from the FCA on the consumer-facing label, but we will also look at whether firms that provide ESG data and ratings should be included in regulation.

Windfall Tax: Oil, Gas and Energy Companies

Debate between Baroness Sheehan and Baroness Penn

Tuesday 22nd February 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, I want to be absolutely clear that the Government have put in support to help people pay their energy bills—we are spending around £9 billion on that. The noble Lord is right that the UK provides tax relief for decommissioning costs, which is something that we have in common with Norway. Of course, different oil and gas fields are at different levels of maturity and have different costs relating to further extraction, and that is reflected in our approach to the North Sea oil and gas fields that we have in the UK.

[Baroness Sheehan (LD)]

My Lords, despite fine words on net zero, it is nigh on impossible to get an accurate picture of the amount of money that oil majors spent on renewables. The little we do know shows that their words pay lip service only. Eni spent less than 2% on investment in renewables, and Shell and BP spent similarly derisory amounts. It really is time to stand up to them: tax their extreme profits and use the money to help people who are having to make desperate choices between heating and eating.

[Baroness Penn (Con)]

My Lords, I am afraid that the Government do not agree with the approach of the noble Baroness. However, where we do agree is on the essential nature of providing further support to households that are struggling with their fuel bills. That is why we are providing a £150 cash rebate for homes in council tax bands A to D, which is about 80% of all households, and a further £144 million of discretionary funding to councils for those households that would not otherwise qualify for that rebate.

Skills and Post-16 Education Bill [HL]

Debate between Baroness Sheehan and Baroness Penn

Committee stage
Tuesday 6th July 2021 Lords Chamber

[Baroness Penn (Con)]

My Lords, I believe there were a couple of additions to the speakers’ list. I believe that the noble Lord is winding for the Liberal Democrats, and we may be due to hear from the noble Baroness, Lady Sheehan.

[Baroness Sheehan (LD)]

My Lords, thank you. I was confused, but I am happy to go with the flow.

This group of amendments addresses the green gap in this Bill. A large number of amendments have been tabled in this group, all of which are very worthy and have my support. I single out for special mention that in the names of my noble friends Lord Oates and Lord Storey, signed also by the noble Baroness, Lady Bennett of Manor Castle. However, in the interest of time, I will speak only to the set of amendments to which my name is attached.

I turn first to Amendments 3, 9 and 25, all in the names of the noble Baronesses, Lady Hayman and Lady Morgan, the noble Lord, Lord Knight of Weymouth, and myself. In doing so, I pay tribute to the noble Baroness, Lady Hayman, for her work in establishing the Peers for the Planet group, which is such a professional asset to this House. Her work and words in introducing these three amendments mean that I can be much more brief. The opening clause in this Bill, which fixes a strategy for the skills that we will need to fill the jobs of the future, is silent on our net-zero biodiversity targets. This seems rather inadequate, for want of a better or stronger word. This is a real weakness in the Bill, not least because it presents a risk that skills or education plans that are incompatible with our green targets—both national and international —might pass without remark and without basis for challenge.

These three amendments are therefore very necessary. They are designed to ensure that consideration of net-zero and biodiversity targets is embedded in the decision-making process around assessing future skills needed in each local area through the local skills improvement plans. Amendment 9 gives the Secretary of State the responsibility for ensuring that any approved LSIP is compliant with net-zero and biodiversity targets. Amendment 25 places a duty on the Secretary of State to report on how approved LSIPs meet the net-zero and biodiversity targets. These amendments will ensure that we have the right jobs in the right place in the future, which will be critical if we want to build back better and greener.

I turn to Amendment 34, in my name with the welcome support of the noble Baroness, Lady Bennett of Manor Castle. Supporting and generating green jobs is a lynchpin of the Government’s 10-point plan for a green industrial revolution. This amendment will help the Government meet those aims by ensuring that, when designating an employer representative body, the Secretary of State must be satisfied that,

“the body has prepared a climate change and sustainability strategy”.

It would serve to demonstrate that ERBs are making the link between the local and the national skills needed and are taking heed of the opportunities regarding climate change and biodiversity.

Amendment 42, in my name and that of the noble Baroness, Lady Bennett of Manor Castle, asks that a governing body, in reviewing how well education or training meets local needs, must also consider whether it aligns with the net-zero target. This amendment would consolidate the link between local and national skills needs with respect to the UK’s net-zero target from the perspective of governing bodies of general FE colleges, sixth-form colleges and designated institutions. It would be an important requirement that would open welcome collaborative discourse between institutions, ERBs and the Government, the lack of provision for which is a weakness of the Bill.

In subsection (2) of the new Section 52B inserted by Clause 5, the review is bolstered by guidance that provides an opportunity for the Secretary of State to ensure that there is a joined-up approach to the way institutions are factoring in net zero when considering how well education or training aligns with our net-zero target. Subsection (3) requires the governing body to publish the review on its website, which would allow for transparency and the identification of best practice, along with any barriers, gaps and inconsistencies, including in relation to net zero.

I turn to Amendment 73, in my name and those of the noble Baronesses, Lady Bennett of Manor Castle and Lady Blackstone, and Amendment 75 in my name and that of the noble Baroness, Lady Bennett. These amendments seek to introduce conditions for inclusion in the list of relevant providers kept by the Secretary of State. Amendment 73 seeks to introduce a condition that relevant providers on the list must have either adopted or be in the process of developing a climate change and sustainability strategy. Amendment 75 seeks to link the provision of funding for relevant providers with either the adoption or development of a climate change and sustainability strategy. Both amendments seek to incentivise progress within the further education sector in embedding climate change and sustainability within their overall strategies, recognising, however, that some providers will be further on in this process than others and that funding and capacity might be an issue for some. Amendment 73 therefore allows for relevant providers to be in the process of developing a strategy.

Taken together, the amendments to which I have spoken reflect a holistic joined-up approach to ensure that all stakeholders working to deliver the right jobs in the right place are conscious of their responsibility in tackling climate change and biodiversity loss. We must not forget that the people who will fill these jobs —especially the younger ones—want jobs that will secure their future, both in terms of longevity of work and in terms of protecting our planet and their physical futures. As it happens, their priorities and needs align with the nation’s priorities and needs, and this Bill must be amended to reflect those.

Tax Avoidance: Base Erosion and Profit Shifting

Debate between Baroness Sheehan and Baroness Penn

Monday 2nd November 2020 Lords Chamber

[Baroness Penn (Con)]

I am not aware of the particular issue that the noble Lord raises, but I will look into it and write to him. The UK is committed to progress on this initiative, which we started back in 2013 when we hosted the G20.

[Baroness Sheehan (LD)]

My Lords, the UN Conference on Trade and Development estimates that developing countries lose up to $200 billion every year in fiscal revenues due to a lack of in-country tax take. Why does CDC, the UK’s FDI, regularly use tax havens, which results in less money for health and education, the undermining of good governance and the consolidation of conditions in which corruption can flourish?

[Baroness Penn (Con)]

I do not recognise the picture that the noble Baroness painted. The UK stands behind the international action being undertaken through the OECD and the progress being made in tackling tax avoidance and evasion. Since 2010 the UK has invested more than £2 billion extra in HMRC to tackle evasion. This has brought dividends in narrowing the tax gap, which is at a near record low.

NHS: GP Vacancies

Debate between Baroness Sheehan and Baroness Penn

Thursday 8th October 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, the noble Lord is correct that the number of GPs is down by 600 on last year. My understanding is that a number of factors have impacted this, including foundation doctors on placement in general practice being redeployed to secondary care during the Covid crisis; GPs working in NHS 111 during the Covid crisis; and the quality and completeness of data being impacted by Covid. But he is right: we need to do more. We have increased recruitment, and our emphasis is also on increasing retainment so that we can increase the number of GPs.

[Baroness Sheehan (LD)]

My Lords, data from a 2018 survey in Pulse magazine showed that during the six years between 2012 and 2018, 565 GP practices closed. What plans have the Government put in place to alleviate the intense pressure on the remaining general practices in the areas most affected, such as the north-east, given that 1.7 million people were left without a GP?

[Baroness Penn (Con)]

One aspect of our response is to increase the number of GPs, but there is also an important role for other healthcare professionals working in primary care. Those numbers increased last year—both the number of nurses working in primary care and the number of other workers, such as physiotherapists and social prescribing link workers. A more diverse workforce and a better mix can free up GP time to focus on those with the highest clinical need.

Economy: Bank of England Forecasts

Debate between Baroness Sheehan and Baroness Penn

Wednesday 13th May 2020 Lords Chamber

[Baroness Penn]

The Government have already improved the generosity of universal credit by £20 a week and raised the value of the local housing allowance. The best thing that we can do in getting people back to work is to get the virus under control and allow the economy to be open. We will of course continue to keep under review any further measures that we need to support people who have, sadly, lost their job during this crisis.

[Baroness Sheehan (LD)]

My Lords, once the lockdown has been eased, the trillions of pounds invested globally in economic recovery packages will have a significant impact on the Paris climate goals. A very recent study in the Oxford Review of Economic Policy on choices for this investment shows categorically that what is good for the economy is also good for lower emissions. Will the Government give thought to making green economic stimulus a central plank of the UK-led COP 26?

[Baroness Penn]

We are very keen to have a green recovery which uses the Government’s policies in working towards economic growth but which also supports our commitment to net zero by 2050.