Ban on Fracking for Shale Gas Bill

Debate between Edward Miliband and Tim Loughton

Wednesday 19th October 2022 Commons Chamber

[Edward Miliband]

We can have a debate about North sea oil and gas, but fracking is a wholly different category. It is dangerous, it is expensive and it is not supported by the public.

[Tim Loughton (East Worthing and Shoreham) (Con)]

The right hon. Gentleman knows that I, like many of my colleagues, am not in favour of fracking and would like us to maintain our manifesto commitment. But he also knows that because he is playing party political games this afternoon, there is no way that we could vote for his motion. Is he more interested in genuinely opposing fracking or in playing party political games and trying to score points on this issue of great importance to our constituents?

[Edward Miliband]

I am glad we have a Conservative Member who wants to uphold their manifesto commitments. It is a refreshing change, I have to say. But here’s the thing: he should be directing his point to the Secretary of State. The Secretary of State was explicitly asked on the radio last week whether he would give the House a binding vote on this issue—I think the case for that is massively strengthened by the fact that the Conservative party is breaking its manifesto promise—and he said no. We are forcing this debate because it is the only way we can give the House a binding vote on this issue.

I want to talk about price. I know he is not exactly flavour of the month, but the recently departed Chancellor of the Exchequer said in February that

“even if we lifted the fracking moratorium tomorrow…no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price…private companies are not going to sell the shale gas they produce to UK consumers below the market price. They are not charities, after all.”

The Climate Change Committee says the same. Even the founder of Cuadrilla, Chris Cornelius, says:

“Even if the UK were to generate significant gas, we are not likely to see lower gas prices—any more than living next to a farm would mean paying less for milk.”

The reason is that prices are set in the European market, and the best evidence from the British geological survey is that fracking can meet less than 1% of European gas demand, and even that in a number of years’ time. Hence it will make no difference to price, and no amount of hand waving from the Secretary of State will change that fact.

Oil and Gas Producers: Windfall Tax

Debate between Edward Miliband and Tim Loughton

Tuesday 1st February 2022 Commons Chamber

[Edward Miliband]

The right hon. Gentleman and I differ somewhat on this. The real problem is that we have not gone far enough or fast enough on the green transition. The more we are subject to the volatility of fossil fuels—the prices are set internationally—the more we are at risk of the kind of crisis we are seeing at the moment.

If there is one principle that should get us through these tough times, it is that those with the broadest shoulders should bear the greatest burden. Britain’s families and businesses are facing the toughest times, but that is not true of everyone. For the oil and gas sector, the price spike has been a bonanza—a trebling of prices today compared with a year ago. Let us be clear about the effect that is having on oil and gas company profits.

Listen to Bernard Looney, the chief executive of BP. He says this: the rise in prices is a “cash machine” for his company. Those were his words—a “cash machine”. Let those words ring in the ears of right hon. and hon. Members in this House. Let us be clear about who is on the other side of the cash machine: the British people. In other words, it is an ATM from which the oil and gas companies collect billions and into which the British people pay—people like the man in Devon who could only afford to heat one room. He is one of the millions paying into the cash machine for BP.

Once the companies are withdrawing the cash from the cash machine, where is the unexpected windfall going? Let us not fall for the argument that may be made in this debate—that it is somehow going into investment or workers in the oil and gas sector. [Interruption.] The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) says from a sedentary position that it is. Let me tell him that he is wrong. All the evidence is that the companies are so flush with cash that billions are being used to inflate the share price in buybacks from shareholders. BP did a share buyback of over £1 billion in August, but it was so overwhelmed with cash that it did another worth nearly £1 billion in November. Shell has done the same, with a £1.1 billion share buyback in December. But that is not enough: it says it will do another one, worth £4 billion, at pace, in 2022.

This is simply a redistribution of wealth from the energy bills of the British people—those who can least afford it—to the shareholders of those companies. The question before us, then, is one that has confronted previous Governments: should we do something about the situation or say that it is wrong to take account of the windfall in the tax decisions that we make? I say that it is not wrong to take account of it—it is fair and it is right and it is principled.

[Tim Loughton (East Worthing and Shoreham) (Con)]

The right hon. Gentleman is setting out the problem, but the trouble is that his solutions do not add up. Does he acknowledge that last year Shell and BP, the two largest oil and gas producers, posted a £26.9 billion and £22.5 billion loss respectively? How much would his windfall tax get from those situations? Does he also acknowledge that the biggest investments in renewable energy—not least hydrogen, into which hundreds of billions are being invested—come from companies such as BP and Shell, which we need to continue investing in alternative non-fossil fuels?

[Edward Miliband]

I will answer all the hon. Gentleman’s points. We would raise £1.2 billion from the windfall tax. I will come to this later in my speech, but the tax position is incredibly generous for companies, including Shell and BP. He says that their money is going into renewables, but I am afraid that he is not correct. Shell’s near-term plans involve investment of just £2 billion to £3 billion in low carbon activities and £8 billion on upstream fossil fuel production. It is just greenwash to say that these companies have somehow moved out of fossil fuels and into renewables. The truth is that when profits have risen by billions and billions and when billions are being paid out in share buybacks, it is not credible that somehow a one-off tax rise, taking just a small proportion of the windfall profits that these companies did not expect, will somehow lead to a collapse in investment.

There is a clear consensus that a windfall tax is the right thing to do. An overwhelming majority of people support it—including, I might point out to Government Members, three quarters of Conservative voters. I do not know what Conservative Members are waiting for: they should support a windfall tax because some of the people who vote for them—or used to vote for them, anyway—also support it. Leading charities have endorsed it and some Conservative Members, including the right hon. Member for Harlow (Robert Halfon) and the former business Minister the right hon. Member for Kingswood (Chris Skidmore), have supported it too.

Of course the oil and gas companies do not want the windfall tax to happen. Let us take their arguments head on. As I have said, the argument that the tax will lead to a collapse in investment is not credible given what the companies are doing with this windfall, and it also misunderstands the long-term basis of these companies’ investment plans. I should also point out that the companies would keep a significant proportion of the windfall, even under our proposals. It is an unexpected, unearned windfall, half of which they would keep.

Secondly, as I said to the hon. Member for East Worthing and Shoreham (Tim Loughton), the proposal comes against a backdrop of the incredibly generous tax position in the UK, which meant that BP and Shell actually paid no net tax at all between 2018 and 2020.

Thirdly, there is a wider context. [Interruption.] The hon. Member for East Worthing and Shoreham is muttering, from a sedentary position, that those companies are not making profits. Actually, they are forecast to make near-record profits this year, as the hon. Gentleman will see if he looks at what outside analysts are saying.

As I was saying, there is a wider context. The oil and gas sector provides important employment for our country and communities. We need a phased transition, but, as I said to the hon. Gentleman, the long-term answer to this crisis is not more reliance on fossil fuels. Indeed, the Business Secretary himself has said:

“the UK is still too reliant on fossil fuels.”—[Official Report, 20 September 2021; Vol. 701, c. 95.]

The answer must be instead to go further and faster on renewables, nuclear and other zero-carbon alternatives, but that is not what the fossil fuel companies are doing with their profits.