Windfall Tax: Oil, Gas and Energy Companies

Lord Sikka Excerpts

Tuesday 22nd February 2022 Lords Chamber

Asked by

[Lord Sikka]

To ask Her Majesty’s Government what consideration they have given to levying a windfall tax on the profits of oil, gas and energy companies.

[Baroness Penn (Con)]

The Government place additional taxes on the extraction of oil and gas, with companies engaged in the production of oil and gas on the UK continental shelf subject to headline tax rates on their profits that are currently more than double those paid by other businesses. To date, the sector has paid more than £375 billion in production taxes. All taxes are kept under review and any changes are considered and announced by the Chancellor.

[Lord Sikka (Lab)]

My Lords, the primary cost of producing oil, gas and green energy has hardly changed. Only the selling price has, resulting in excessive profits without any additional effort for the companies. A windfall tax is needed to help hard-pressed households. Why are the Government so wedded to their ideology rather than helping the people?

[Baroness Penn (Con)]

My Lords, the noble Lord is correct to talk about price fluctuations in the sector, of course. In spring 2020, the price of oil crashed to below $20 a barrel. That year saw investment in the sector at an all-time low, so an abrupt tax change would create further uncertainty and potentially undermine significant investment in that sector. However, the Government remain committed to supporting households with the cost of energy and have set out plans to do so.