North Sea Oil and Gas Producers: Investment Allowances

Lord Tunnicliffe Excerpts

Tuesday 7th June 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

I would like to follow up on the questions posed by the shadow Chancellor in the House of Commons yesterday but not answered, particularly now that the Government have had time better to digest them. First, how much will these tax breaks cost? When will the Government make their analysis public? How can the Government be sure about how much this new levy will raise when the Chancellor has added what is, in essence, a get-out clause? Why are the Government continuing to incentivise fossil fuels rather than renewables, which do not benefit from the tax breaks in this announcement?

[Baroness Penn (Con)]

My Lords, the energy profits levy is expected to raise around £5 billion in the first 12 months, and that factors in the investment allowance designed into it. The Government will publish a tax information and impact note alongside legislation to introduce the levy, which will come before Parliament shortly, and the OBR will take account of the levy, including the allowance, at its next forecast.

On the noble Lord’s point about renewables, no, they will not benefit from the investment allowance, because they are not subject to the additional levy, but I reassure noble Lords that we are absolutely committed to increasing investment in renewables. We have R&D tax credits, the super-deduction and a number of other schemes in place to support them.