Windfall Tax: Oil, Gas and Energy Companies

Lord Browne of Ladyton Excerpts

Tuesday 22nd February 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, the Government agree that an abrupt tax change could put investment in this sector at risk. While the overall tax burden is high, we have had to take certain decisions to aid our recovery from the pandemic. We saw the Government put in place so much support during the pandemic, but we need to recover, for example by getting on top of NHS waiting lists.

[Lord Browne of Ladyton (Lab)]

My Lords, the Minister tells us that the Government are concerned that a windfall tax would deter companies from investment, so let us look at that. The Norwegian Government tax companies at 22% and add 53% for those that operate in the North Sea. We apply 40% tax to profits, but we have massive rebates for investment and for decommissioning, with the result that, over five years, 19 companies that operate in the North Sea have paid no tax at all. The Norwegians have no problem getting corporate investment in the North Sea; why would we have any problem getting corporate investment in the North Sea, if we took some of these unearned profits this year to help poor people with difficulties paying their own energy bills?

[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.