Charlie Maynard
Main Page: Charlie Maynard (Liberal Democrat - Witney)Department Debates - View all Charlie Maynard's debates with the HM Treasury
(1 month, 1 week ago)
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Charlie Maynard (Witney) (LD)
The electricity generator levy is a windfall tax on UK electricity generation from nuclear, renewable and biomass sources, and it raised £0.7 billion in the last financial year. The EGL is a revenue-based tax that currently applies at a rate of 45% on exceptional generation receipts above a benchmark price of £77.94 per megawatt-hour, with an allowance of £10 million per company. In contrast, the energy profits levy applies to oil and gas production in the UK and the UK continental shelf, and raised £2.9 billion in the last financial year. We support the goal of seeking to fund cost of living support through emergency revenue measures during the gas price shock, but we also note that power wholesale prices are now around £90 per megawatt-hour, compared with a spike of £135 per megawatt-hour and a pre-Iran conflict price of £80 per megawatt-hour. How much is this measure likely to raise, given the move in prices? It feels like the horse may have already bolted, so I would be interested to hear the Minister’s thoughts on that.
We recognise that this measure is a nudge to accelerate the shift of legacy renewable generators away from volatile wholesale prices and towards fixed contracts for difference, using a higher tax rate as leverage. If legacy renewable generators—those on the renewables obligation, not those already under CfDs—sign up to a wholesale contract for difference, they exchange their volatile wholesale revenues for a fixed strike price. That is obviously good news for consumers, who are insulated from future gas price spikes on that portion of generation because the generator is no longer passing through the wholesale prices, and the Government capture any upside via the Low Carbon Contracts Company when wholesale prices rise.
The second motion will increase the mileage allowance. Again, this seems a logical step, and one that we are happy to support. I note that the 45p rate has been frozen since 2011, so it has been 15 years without an adjustment. Over that period, the costs of fuel, insurance, tyres and servicing have all risen materially, so while 55p is a meaningful correction, it is questionable whether it fully catches up with accumulated inflation. This change will have a positive impact overall, not least for people in professions such as care work, who do a lot of driving between appointments. I refer again to the Lib Dem proposal to cut fuel duty by 10%—if the Chancellor took that proposal on board, it would combine with the increase in mileage allowance to make a significant difference in the pockets of people who often have to drive for work. I also note that the cost of this change has not been set out, only that it is
“subject to scrutiny by the Office for Budget Responsibility and will be set out at a future fiscal event.”
Personally, I do not think that is good enough. The Treasury team should set out the cost of any change in the tax take, whether positive or negative, when it is proposed.
Finally, the 12-month vehicle excise duty holiday for HGVs is a sensible and welcome measure, and we will not oppose it. Our hauliers, such as Chris Hayter in Witney, are critical. They are the backbone of our economy, and I understand that the Minister knows them well. We need to be honest about what this change is and what it is not. Our haulage sector was already in crisis before the conflict in Iran. Insolvency rates in road freight have been running at record levels. Margins were being squeezed by rising insurance costs, driver shortages and the lingering disruption of years of post-Brexit paperwork. The Iran conflict has simply poured fuel—at £1.85 a litre—on to a fire that was already burning.
The VED holiday saves a typical operator about £600 a vehicle. We welcome every penny of that, but against a fuel cost shock that is adding £1 billion a year to the industry’s cost base, it is by the Government’s own figures a quarter of the problem. Many operators will burn through that saving in a matter of weeks at the pump. What the sector needs alongside this is a serious long-term plan on fuel duty RPI indexation, which threatens to push costs higher again next April, on driver recruitment and retention, where the shortage remains acute, and on the transition to cleaner vehicles, where smaller operators have been left without a credible path to decarbonisation. We will support this measure through Parliament because the people driving these lorries deserve the relief now, not after another round of consultations.
