Energy (oil and gas) profits levy

Drew Hendry Excerpts

Tuesday 22nd November 2022 Commons Chamber

[James Cartlidge]

I do apologise—Alba.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It’s a stock answer.

[James Cartlidge]

It is not a stock answer. How could it be a stock answer when I have not taken an intervention like that before?

The hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) will I am sure forgive me but, on his substantive point, we have delivered a significant windfall tax, but with the investment allowance that balances the interests of investment in the sector against needing to raise revenue. I repeat, where is that revenue going? It is to help families throughout the United Kingdom, including in Scotland, because we are stronger together when the support of the Treasury, at the heart of the United Kingdom, helps everyone in every part of this country.

The final issue to address with regard to taxation is business rates, which I know many colleagues feel strongly about. We believe that bills for business rates should accurately reflect market values, so we will proceed with the revaluation of business properties from April 2023. However, we will soften the impact on businesses with a £13.6 billion support package over the next five years. Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit. Furthermore, we are extending and increasing the retail, hospitality and leisure relief scheme from 50% to 75% in 2023-24, showing that this is a Government committed to protecting the businesses that make our high streets and town centres successful.

These are not easy times to bring in these sorts of measures, but that does not mean the Government will shy away from difficult decisions. Our priorities, expressed through the autumn statement, are stability, growth and public services. Today, we are debating specific tax measures and the importance of sustainable public finances, but what the Government are delivering is much more comprehensive than that—an integrated response to what the Chancellor last week called

“a global energy crisis, a global inflation crisis and a global economic crisis”.—[Official Report, 17 November 2022; Vol. 722, c. 855.]

The bottom line is this: because of the difficult decisions that I have outlined today—the decisions this Government are not afraid to take—the OBR confirms we will see less severe inflation and a shallower recession, but perhaps most importantly, unemployment is forecast to be 70,000 lower than would otherwise have been the case. That is 70,000 real families who will benefit. At the same time, when growth returns, we will be in a better position to pay our debts, ensuring those are not simply passed on to future generations. That is the promise of this autumn statement—a statement that is balanced, honest and fair—and I commend it to the House.

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[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Opening yesterday’s debate, the Chief Secretary to the Treasury said that this was not a return to austerity. That made me wonder what the Government call a forecast drop of 7% per person in household living standards. Over the past 12 years, we have had Tory Prime Minister after Tory Prime Minister after Tory Prime Minister—I could go on, because there have been quite a few of them—telling us that this is the end of austerity, but in that time what we have seen is growing inequality and mortgages rising, and now we have record inflation and energy costs are skyrocketing.

This Tory Government have presided over nothing but austerity, and they offer people no hope of anything else. They have presided over the continued chaotic mismanagement of the UK economy that forces ordinary people to pay the price. That view is shared by many people. When preparing for this speech, I looked at all the different resources—people who have made contact to comment on the Budget statement and the events of the past few months. It was really difficult to narrow them down, because so many people representing so many organisations across business and charities have been critical of the way the Government have handled and are handling things. I will pick out just a few. Paul Johnson, director of the Institute for Fiscal Studies, said:

“The truth is we just got a lot poorer. We are in for a long, hard, unpleasant journey…that has been made more arduous than it might have been by a series of economic own goals”.

He went on to mention the disastrous mini-Budget of course, but he also stated:

“Very clearly, Brexit was an economic own goal. Economically speaking that has been very bad news indeed”.

I notice that no one else dares to speak of Brexit in this Chamber, but the damage is real and has been done. Scotland voted resolutely against Brexit; we voted to remain in the EU and were ignored, and now we are paying the price. In a very impressive speech, the hon. Member for Hampstead and Kilburn (Tulip Siddiq) made a lot of persuasive arguments, but I noticed again that Labour dares not go there, because when it comes to Brexit, they have taken the clothes off the beach and put them on themselves. It is not good enough.

Let me go further and quote the UN Human Rights Council, which includes nations such as Brazil and which has urged the UK Government to implement an energy poverty strategy that addresses the impact of rising costs on child poverty targets. It has gone further still and asked the UK Government to

“improve food security, in particular for children, adolescents and persons with disabilities”.

Does that make the Tories feel proud? It is almost unbelievable. Scotland deserves much better than that.

The Food Standards Agency consumer insights tracker points out that the proportion of people who cannot afford to eat a healthy balanced diet rose to more than a third in October. More than a third of people cannot afford to eat a healthy balanced diet. A quarter of people reported eating cold food because they could not afford to cook. About a fifth are turning off fridges and freezers with food inside them because they reckon they cannot afford the energy to run those appliances. That is a disgrace. All the nations of the UK deserve better. The people I represent in my constituency and across Scotland definitely deserve better.

The Resolution Foundation points out that, far from the Government taxing the rich, as we have heard in this Chamber—taxing those who can most afford it—it is the people in the middle who will be squeezed by a near 4% hit on their income, which is a bigger hit than high earners will experience. The Resolution Foundation warns that the statement means nearly 20 years of wage stagnation between 2008 and 2027 due to the weak forecast for pay and the effects of inflation, hurting people in their homes, hurting families and hurting children. The foundation further points out that households living in harder-to-heat homes with larger families are particularly hard hit by energy bills—nearly a quarter of them are affected. It is worse for people who live off the gas grid—a large number of people in rural communities of the sort that I and many others represent. Look at what they have been offered. Yes, it is great to see a doubling from £100 to £200 in the support for off-gas-grid households, but that is nowhere near enough. Are Ministers living in the real world? At the moment, the minimum oil or kerosene delivery is £500. The amounts offered will not touch the sides, and people living in off-gas-grid households will pay far more than £4,000 for their average energy bill.

[Paul Girvan (South Antrim) (DUP)]

In mainland UK, heating oil can be bought for 82p per litre, but we in Northern Ireland are paying £1.08 per litre. Fuel poverty is a major problem in Northern Ireland.

[Drew Hendry]

The hon. Member makes a good point about affordability for his constituents. This is a major issue for people in rural communities across the nations of the UK, especially Scotland, although Northern Ireland fares similarly in having a colder climate. These are big, big issues for people. There is no real acknowledgement in the autumn statement of the difficulties for people living their real lives in that type of accommodation in those areas.

The OBR pointed out that Westminster’s Brexit

“will result in the UK’s trade intensity being 15 per cent lower in the long run than if the UK had remained in the EU.”

The Bank of England Governor Andrew Bailey said the UK has suffered a “dramatically” worse recovery than the US or the EU. Government Members like to pretend that the only things that have happened are the war in Ukraine and the global pandemic, but they must take responsibility for the economic self-harm they have imposed on people across the UK and in Scotland through their Brexit ideology, which is resolutely failing and being proved to fail on a daily basis. Scotland deserves better than that.

The CBI director general says of the situation:

“There was really nothing there to tell us that the economy is going to avoid another decade of low productivity and low growth”.

On labour shortages, he called for a practical approach to immigration and urged the UK Government—he might do the same for the Labour party—to be “honest” with people over the UK’s “vast” labour shortages, and said:

“we don’t have the people we need, nor do we have the productivity.”

Scotland deserves better than this.

Business after business ignored. Organisation after organisation ignored. Expert after expert ignored. The UK Tory Government ignore them all. We have seen non-doms protected. Bankers’ bonuses are now unlimited. Many companies are still avoiding their tax responsibilities and public services are facing their most brutal cuts. The Health Foundation pointed out that the whole health budget amounts to only a 1.2% increase in real terms over the next two years, which is well below the historic average of 3.8%. For Scotland, that means having to draw back on the services we can provide. We are focused on trying to support people with fair pay settlements, so they can navigate the cost of living crisis. The Health Foundation also shows that if spending per person had matched the EU average, the UK would have spent £40 billion more than it has done.

On the climate, where have all the good promises gone? Where have all the warm words gone on taking the global climate crisis seriously? In fact, the autumn statement undermines Scotland’s climate change goals and underlined the dangers of Scotland being held back. The UK Government are pushing ahead with nuclear, which is the most costly and the slowest form of energy to deliver, and has the highest environmental impact. The UK already has the most poorly insulated homes in western Europe. There is nothing to change that situation. They still have not delivered, after a number of betrayals, the Peterhead carbon capture and storage project. They have put a higher—higher!—windfall tax on renewable energy producers than they have on oil and gas. That is quite incredible. They have deterred and deferred the uptake of electric vehicles. At a time when momentum was growing for people to invest in an electric vehicle to be better for the climate, what do this Government do? They introduce a pretty high tax to put people off doing that. People will persevere with their petrol and diesel for a bit longer, and burn more carbon-intensive fuels.

In Scotland, the Scottish Government have been working to protect people, despite a real-terms cut of 10% since December due to inflation. Any Westminster increase as a result of the autumn statement will more than be wiped out by inflation. We prioritised public sector fair pay and are prioritising funding to help households, businesses and people to get through this period, but we are reaching the limit. In fact, the limit of what can be done, without borrowing powers and the powers we need to look after our people properly, has already been reached, in sharp contrast to this place. Under Westminster, we continue to see growing inequality, mortgages rising, inflation rising and energy costs skyrocketing. When we compare countries of Scotland’s size or smaller, we find that, for them, independence works. Compared to the UK, those countries are wealthier and more equal, and have higher productivity, lower poverty, lower child poverty and lower pensioner poverty. They have higher social mobility and higher business investment.

Scotland has not voted Tory for nearly 70 years, yet we are saddled with this. Scotland did not vote for Brexit, and we do not want it. Scottish people, families and children are bearing the brunt of Westminster’s legacy. Scotland is being denied the people it needs to strengthen its communities, its businesses and our country. Scotland has voted time and time again to have its say on its future. It cannot be denied. The choice is between the toxic approach here in Westminster, or a normal independent country.

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[Chris Stephens]

I thank my hon. Friend for making that point, because we should be looking at an excess profits tax across the board. It is quite right to mention the oil and gas companies, but they are not the only ones who benefited from the pandemic. We now seem to be being told by the Government that tax avoidance and evasion somehow disappeared during the pandemic. That is the only conclusion we can reach when we look at the figures in these documents.

In addition, the Government seem to be making no attempt to discuss how we tackle energy prices. People have a very real perception that the regulators are on the side of the energy companies, not the consumers. That is exactly what the people on the streets believe when they talk about energy. We should start giving the regulators more teeth and encourage them to use their powers to go after the energy companies that are making excess profits, as well as to bring prices down for consumers, because that has to happen.

[Drew Hendry]

My hon. Friend is making a powerful point about the absolutely crushing effect that energy costs are having on families and communities. Does he agree that off-gas grid supplies should be regulated as well? For too long they have been ignored, and people are paying substantially more to heat their homes than people on the gas grid do.

[Chris Stephens]

I agree, and my hon. Friend made powerful points earlier about costs, as did the hon. Member for South Antrim (Paul Girvan). Poverty is a real issue across the UK—it is not just an urban, but a rural issue—and it affects all the communities across these islands.

As much as I welcome the fact that benefits were uprated in line with inflation, it has always been regarded as a political fact that that should happen anyway, so we should not give the Government any kudos just for following what should take place. However, as the hon. Member for Bradford East (Imran Hussain) rightly argued, food inflation has gone up by 16%, and we are seeing a rise in the use of food banks and affordable food projects, which are the next level above food banks. Pantries and larders are opening up in many of our communities to help people move away from food banks, and I am involved in many such projects in Glasgow South West.

[Drew Hendry]

Will my hon. Friend give way?

[Chris Stephens]

I will in a second, but I want to talk about poverty and the Department for Work and Pensions—I am on the Work and Pensions Committee.

The DWP is closing offices and laying off its workers. Incredibly, the Department that is responsible for employment and social security is saying to its workforce, “You are no longer required,” because it is closing offices. That position is absolutely risible, and it is made even more risible by its refusal of home working for people who are under threat of redundancy. One thing that did work during the pandemic was home working; it helped people to get into the workplace. As we heard in my exchange with the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), when we encourage home working, we encourage people into paid employment.

It seems daft that Government Departments are telling their workforce, “Come into the office, come into these workplaces, but you can’t work from home.” The Government have to show a bit more creativity if they are serious about dealing with long-term unemployment, turning around people’s lives and getting them into work. It seems completely contradictory for them to say to their workforce, “You cannae work from home.” The position they find themselves in is completely and utterly risible.

I hope that the Minister will answer this question: of the 6,000 additional employees that the state is going to employ, what will the ratio be between the DWP and HMRC? I will make an educated guess: the overwhelming majority will end up in the DWP chasing social security fraud and error, not in HMRC tackling tax avoidance and evasion.

Finally, there was nothing in the statement about public sector pay policy. So many workers have taken the view that they have no alternative other than to withdraw their labour because of the low pay offers that they get from employers, including many in the public sector. The overwhelming majority of civil servants are not covered by pay review bodies, yet we do not know the Government’s policy on public sector pay. Public sector workers spend that money in the economy and there could be an economic boost if we give public sector workers the pay rise that they deserve. I hope that we will get an answer to that, because public sector workers deserve better than to be treated as the Government are treating them.

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[Victoria Atkins]

My hon. Friend is absolutely right. Indeed, the OBR—the independent OBR—again confirms that because of our plans the recession is shallower, and inflation is reduced because of these very difficult decisions we have taken. Unemployment is also lower, with about 70,000 jobs protected as a result of our decisions.

[Drew Hendry]

The Minister is very keen to lay inflationary pressures globally, but how does she explain the OECD figures showing that, for market interest rates, the UK is at the very top of the tree?

[Victoria Atkins]

As the Governor of the Bank of England has explained, disruption in the markets has subsided, and the impact of that has flushed through the system. I would emphasise to the hon. Member the evidence we are seeing in other countries. I do not shy away from that; I offer it as an example of the pressures we are all facing internationally. It is precisely that international picture that the Government are addressing.

The hon. Member for Bradford East (Imran Hussain) laid down in, if I may say so, a rather loud speech that there was no help for his constituents with the cost of living. It was passionate, I am told. It is fair to say that my hon. Friend the Member for Southend West (Anna Firth) expressed astonishment at his passion, and my hon. Friend the Member for Bolsover (Mark Fletcher) said that some Opposition Members were living in a different galaxy.

On a serious note, I do want to help colleagues across the House understand the help that is available, because I know that hon. Members will be responding to their constituents’ worries. Any constituent who is on benefits or paid pensions will have them increased by 10.1%. Any constituent on means-tested benefits will have a one-off payment of £900. Any constituent on pension credit will have a one-off payment of £300 on top of their winter payment, and those who are living with disabilities will have a one-off payment of £150. Any constituent on the national living wage will see an increase to their salary, with the hourly rate going up to £10.42. Every single one of our constituents will see help through the energy price guarantee, which is worth on average £900 this year and will be worth £500 next year, and it helps to lower inflation by 2%.