Finance Bill

Debate between Andrew Snowden and Dave Doogan

Committee of the whole House
Tuesday 10th December 2024 Commons Chamber

[Dave Doogan]

The changes to the EPL, particularly those set out in clauses 15 and 17, will have a hugely damaging effect on jobs and the Scottish economy. This is also an inauspicious day for Scotland in this so-called United Kingdom as Norway’s sovereign wealth fund records a €1.7 trillion breakthrough, while Scotland’s oil wealth has been squandered by successive Westminster Governments. Norway gets financial security in perpetuity; Scotland gets Labour’s bedroom tax, cuts to winter fuel payments for our elderly and the highest energy prices in the G20—that is the Union dividend wrapped up and served on a plate right there. More than £400 billion has flowed from our waters to the Treasury over the years, with very little coming back in the other direction. Rather than reverse the train, the Labour Government have, with this increase to the EPL, chosen to accelerate it.

The cumulative effect of clauses 15 to 18 will sound the death knell for Scotland’s hydrocarbon production in advance, crucially, of the transition—economically illiterate, fiscally incompetent and with industrial suicide as the result. A windfall tax is supposed to be a tax on extraordinary profits, yet the extraordinarily high global oil and gas prices that preceded the introduction of the tax have long since abated. Through these changes, the Labour party jeopardises investment in Scotland’s offshore energies and risks the future of our skilled workforce and our ability to hit net zero while employing those workers. Analysis from Offshore Energies UK shows that the increase and extension of the EPL risks costing the economy £13 billion and putting 35,000 jobs at risk.

The analysis from OEUK also shows a collapse in viable capital investment offshore under these changes from £14.1 billion to £2.3 billion in the period ’25-29. It is increasingly apparent that the Government do not really understand how investment horizons work offshore. They are not on a month-to-month basis; they take years to work up. This loss of economic value impacts on not only the core sector, but domestic supply chain companies, many of whom exist in my constituency, which have an essential role to play in the just transition.

The Labour party promised that there would be no cliff edge, yet it has concocted one for the 35,000 workers whose jobs this EPL change puts at risk. Labour had claimed that these changes would keep the UK in line with Norway, but the regime after Labour’s changes cannot be compared to that of Norway, which allows companies a maximum £78 of relief per £100 expenditure —in the UK, this relief would be £46.25. After these past couple of weeks, I am given to wondering if those on the Treasury Front Bench can actually count.

Changes to the EPL will hinder the just transition. The Government argue that the reduction in the rate of the decarbonisation investment allowance to 66% will maintain the overall cumulative value of relief for investment expenditure following the rate increase, reflecting the fact that this relief will increase in value against a higher levy rate. However, the policy still reflects a political choice by Labour to deprioritise investment in decarbonisation. Rather than allowing more valuable decarbonisation relief as the solitary positive by-product of its tax hike, Labour has striven to ensure that there is absolutely no silver lining to this fiscal attack cloud on Scotland’s energy industry.

[Mr Snowden]

At the heart of this, when we have comparisons to Norway, is a sheer focus on trying to squeeze as much taxation out of the industry as possible, without a focus on how to become more competitive. Does the hon. Gentleman agree that what we need for jobs and for energy security in the UK is to compare ourselves to the most competitive oil and gas economies in the world, and not those that squeeze and tax the most out of the industry and kill jobs?

[Dave Doogan]

Exactly. The hon. Gentleman raises the question of jobs, and the Government are playing fast and loose with jobs in the oil and gas sector. They are playing Russian roulette. They do not seem to understand that when what they have got wrong comes home to roost, they cannot just say, “Sorry, we got that wrong.” When it is gone, it is gone—they cannot bring it back. This is 2024, not 1972. We are already in the closing chapter of the sector; it will not be coming back. This Government seem to completely misunderstand that.

The simple truth is that the UK state cannot meet net zero or create green growth if Labour’s policies to hack away at investment in both the domestic workforce and the sector are allowed to progress. It is clear that the Labour party is abandoning Scotland’s existing energy sector, and putting at risk the just transition into the bargain. With these changes to the EPL, Labour will be creating the worst of all worlds: it will starve industry of investment, sacrifice the jobs of those who can deliver net zero, threaten energy security, keep energy bills high and harm the economy of Scotland, while at the very same time failing to invest the money required to truly deliver against a green transition.