Winter Fuel Payment

Debate between James Murray and Andrew Bowie

Tuesday 10th September 2024 Commons Chamber

[James Murray]

I am going to make some progress.

The important point to focus on in this debate is making sure that everyone eligible for pension credit takes up that offer, not only so they receive the benefit of pension credit, but so that we can better target the winter fuel payments, given the financial inheritance that we have. We estimate that 880,000 pensioners are missing out on pension credit to which they are entitled, and frankly the Conservatives failed to act on that for years. That is why it is so important that we are now conducting a campaign to make sure that as many people as possible make a claim.

Our approach is already showing signs of success. The Government have received around 38,500 pension credit claims in the five weeks since the announcement on 29 July. That is more than double the number in the previous five weeks, and we will continue to do all we can to encourage pensioners who are eligible to apply for pension credit. We have used a wide range of media to reach pensioners and key stakeholders, and have been working with voluntary organisations such as Age UK and Citizens Advice, local authorities and the devolved Governments to raise awareness through their networks and channels. The Secretary of State for Work and Pensions is taking the further unprecedented step of writing to 120,000 pensioner households who are in receipt of housing benefit but who are not yet claiming the pension credit that they are likely to be entitled to.

Our national pension credit campaign will run right through until the application deadline on 21 December.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

On 11 February 2021, the temperature in Braemar in my constituency sank to minus 23°. Some 17,000 pensioners there will lose their winter fuel allowance through a decision taken by this Labour Government. Can the Minister explain to those pensioners in one of the coldest constituencies in the country why they have to surrender that important support at the same time as the Government have found £11 billion to give pay rises to their union paymasters?

[James Murray]

I would be interested to understand why the hon. Gentleman is backing a candidate to lead his party who supports the means-testing of the winter fuel payment. He might want to have a conversation with that candidate before he starts criticising our approach of targeting support at those in greatest need. The critical point is that the combination of the state pension rising under the triple lock with those in greatest need getting winter fuel payments alongside pension credit, not to mention the extension of the household support fund, means that the right measures are in place to give all pensioners the support they need.

Opposition Members want to know why the legislation is being progressed urgently. I will be really clear: it is urgent because we need to deal urgently with the £22 billion black hole—the huge in-year spending pressure—that we inherited from the Government that they ran. It is crucial that we act quickly to restore responsibility to our public finances and stability to our economy. On top of that, it was important that we made sure that regulations were in place at the start of the qualifying week for winter fuel payments, while wasting no time in doing all we can to raise pension credit take-up.

Energy (Oil and Gas) Profits Levy Bill

Debate between James Murray and Andrew Bowie

2nd reading
Monday 11th July 2022 Commons Chamber

[James Murray]

I look forward to the hon. Gentleman supporting Labour’s amendments and new clauses to the Bill as we seek to cut some of the loopholes the Government have introduced, which I will turn to in a moment.

Let us not forget that, while cost of living pressures on people across the country have soared relentlessly, oil and gas producers’ profits have climbed too, with some tripling this year. A fair solution has been staring the Government in the face: levy a one-off windfall tax on North sea oil and gas producers’ profits and use that money to help to cut people’s energy bills at home.

Yet when, on 9 January this year, the shadow Chancellor first called on the Government to levy just such a tax, Conservative MPs opposed it outright. Leading that opposition the very next day was the then Education Secretary, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi). He is now of course the Chancellor, so this is his Bill. At the time of our announcement, the now Chancellor, who was an oil industry executive before becoming an MP, came out firmly against the tax on the grounds that oil producers were “already struggling”. When she responds, I would be grateful if the Financial Secretary to the Treasury confirmed whether the Chancellor supports his own legislation today.

Back in January, of course, it was not only the now Chancellor who opposed the tax. The Business Secretary opposed it too, saying:

“I have never been a supporter of windfall taxes.”

The then Northern Ireland Secretary, the right hon. Member for Great Yarmouth (Brandon Lewis), said that he thought a windfall tax sounded attractive, but did not work. The Deputy Prime Minister claimed it would be disastrous. Ministers and their Back-Bench Conservative colleagues then went on to vote against our plan for a windfall tax on three separate occasions.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

This demonstrates the difference between Opposition Members and Conservative Members, in that we do not come lightly to the decision to increase taxes on successful British industries. Labour and the SNP would tax anything that moved; we take a long time to think through our plans carefully. That is why we are presenting this plan today, which is far removed from Labour’s plan. That would decapitate the oil and gas industry—which, by the way, Labour does not support—and we would have the taps turned off tomorrow.

[James Murray]

The hon. Member is right that Conservative Members have taken a long time to come round to this. They have taken seven months to come round to it—seven months in which the cost of living pressure on people across the country has risen relentlessly and in which oil producers have seen extraordinary profits. That delay has not been without cost.

Despite our common-sense plan for a windfall tax having wide support across the country for many months, with even oil bosses backing its logic, Conservative Ministers and their colleagues on the Back Benches simply refused to get on board—until 26 May, the day after the Sue Gray report was published. That was the day the Prime Minister and the former Chancellor suddenly changed their minds. It seemed clear that what had finally caused the Conservative leadership to change course and back a windfall tax was not the deafening calls from people across the country for help with their energy bills, nor the blatant unfairness of oil and gas producers’ profits soaring in the middle of a cost of living crisis; rather, it was the need for a different set of headlines in that week’s news. That is a grubby way to govern, and it is proof, if further proof were needed, that the Conservatives are not fit to lead our country.

Now, after months of refusing to act, Ministers are rushing this Bill through Parliament with just one day of debate and with a consultation period on the draft legislation of just seven days. As Tax Justice UK, working with the campaign group Uplift, has said, such a short period of just one week for consultation on the draft Bill is

“a breach of well-established legal principles of procedural fairness.”

As it points out, having a longer consultation period would not delay the levy taking effect, as the Bill names its start date as 26 May. It fears that the shorter consultation period the Government have chosen offers

“those with most resources—such as oil and gas producers—more opportunity to influence the shape of the legislation.”

--- Later in debate ---

[James Murray]

I thank the hon. Gentleman for his intervention. We discuss many matters with Tax Justice UK, not least its response to the ridiculously short consultation period on the draft of the Bill that the Government are now seeking to rush through Parliament in a day.

Despite the fact that Ministers may be in a rush today, we know that their story until recently has been one of delay. Those months of delay in backing a windfall tax mean that the public finances have missed out on billions of pounds of tax revenue that could have gone towards further help for people struggling with the cost of living. But whatever it took to get the Prime Minister and the former Chancellor over the line, we were relieved that they finally agreed to back a windfall tax. On behalf of the people we represent across the country, we were relieved that some help with soaring energy bills was finally on its way. That help is set to include a payment of £400 to all domestic energy bill payers. We welcomed that promise of support announced alongside the windfall tax, and we were relieved that the Government had finally listened to what we and so many others had been saying as they agreed to drop the “buy now, pay later” compulsory loan scheme that had been promised before. But we were dismayed to learn that some of the people who need the help least will be getting that £400 payment several times over. Because this package has been cobbled together at the last minute, people who live in more than one home will get £400 for each of them, so a total of £200 million of public money will go towards people with multiple properties. That is not fair, it is not a good use of public money, and, as we see far too often, it is public money being casually wasted by this Government.

While that particular loophole may have been the result of carelessness or haste, the Bill contains another loophole that has been created by design—a brand-new tax break for oil and gas producers that will give money back to the same firms that were supposed to be paying their fair share through the windfall tax. This tax break means that oil and gas producers will receive an unprecedented level of subsidy for their spending on oil and gas-related activities. For every £100 an oil and gas producer invests in the North sea, they will receive £91.25 from the taxpayer. That compares with £25 that companies receive for investing in renewable energy—a figure that will fall to just £4.50 from April 2023.

[Andrew Bowie]

Although the hon. Gentleman is talking about how the Labour party likes to support working people, he is quite obviously abandoning all those working people who rely on the oil and gas industry for their employment, including the many thousands who live in my constituency. Given that he has had so many months to think about this, how many times have he and his shadow Cabinet colleagues actually met those in the oil industry to discuss this and see how it impacts on them?

--- Later in debate ---

[James Murray]

I and my hon. Friends have had discussions with them many times, and it is absolutely clear that even oil company bosses agree with the logic of a windfall tax, saying that it would not affect their investment plans.

[Andrew Bowie]

rose—

[James Murray]

No, I am not going to give way. I have been generous in giving way, and I am going to make some progress now.

This is a subsidy that not even oil executives think is necessary. BP’s chief executive, who in November last year said that soaring global commodity prices had made his company a “cash machine”, told shareholders in May that the company’s £18 billion of investment plans were

“not somehow contingent on whether or not there is a windfall tax.”

Yet despite even oil executives questioning its worth, the Government are pushing ahead with this tax break. Our analysis has shown that this means a third or more of any revenue from the new levy could be handed straight back to oil and gas producers.

The truth is that this tax break means that money that is supposed to be helping people struggling with their home energy costs will instead go back to the very oil and gas producers that have been making record profits during the energy crisis. Furthermore, that money will subsidise projects that almost certainly would have happened anyway. There is no requirement in the Bill for investments claiming this tax relief to be additional to what was already planned.

I wonder whether the Financial Secretary to the Treasury wants to correct what she said in this Chamber on 6 June. That day, she said:

“The investment relief should not be available for investments that are deadweight. It should be for new investments.”—[Official Report, 6 June 2022; Vol. 715, c. 546.]

Yet there is nothing in the Bill to make sure the tax relief it introduces goes towards investments that are new. Above all, let us remember that we are currently holding the COP26 presidency and being trusted with a position of leadership in the world’s efforts to tackle the climate crisis. It is astonishing and appalling that, at this of all times, we are giving 20 times more in taxpayer incentives to oil and gas producers than will be offered to firms investing in renewable energy.

While this Bill has plenty to say about tax breaks for oil and gas producers making extraordinary profits, it is silent on the idea of a windfall tax on the electricity generation sector. We know the Government were planning to tax the sector’s profits, as it was widely briefed in late May that the former Chancellor had ordered Treasury officials to draw up plans for a windfall tax on electricity generators. The uncertainty created by this will-they-won’t-they hokey-cokey on taxing profits from electricity generation risks discouraging vital investment in our future energy security.

As the Government are well aware, the price of electricity generated from renewable sources is currently linked to the price of gas. The spike in gas prices we are facing has therefore pushed up electricity prices, despite the costs of generating electricity from renewable sources not having changed, yet there is nothing about the electricity generation sector in today’s Bill and no detail on any wider plans from the Government to delink electricity prices from the price of gas. All we were promised in the explanatory notes published with the draft Bill was a vague intention that

“the government will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.”

I therefore urge the Financial Secretary in her response to take this opportunity to say, once and for all, whether the Government will or will not be introducing additional taxes on this sector, and when the Government will bring forward urgent legislation to delink the price of electricity from the price of gas. We are not claiming that a solution to this is simple, but it is the job of Ministers, and a sign of leadership in government, to plan ahead and solve the challenging issues our country is facing.

The windfall tax is a way to offer immediate help to people now, but we need to be investing in the long term to keep energy bills down and make our economy more secure and more sustainable. That is why the Government should be adopting not just our plan for a windfall tax, but also our wider plan to improve energy security and keep energy bills lower in the future. Labour’s plan would see us accelerate home-grown renewables and new nuclear, double onshore wind capacity, reform our broken energy system and retrofit 19 million homes to save households an average of £400 a year on their bills. From the Government, however, all we have in front of us today is a Bill that gives a tax break for oil producers’ continued spending in the North sea. Once again, this Government lurch from crisis to crisis with no plan to fix our broken system and provide the security we need.

We are relieved that the Government are finally proceeding with the windfall tax, and we will be supporting this Bill today, but we will come back to the detail of it in Committee of the whole House. At that stage, we will urge Ministers to make right their delay in introducing the windfall tax and to drop the unnecessary tax break for oil producers that undermines the impact of this windfall tax and our country’s wider efforts to tackle the climate crisis.

The Conservatives’ approach to the windfall tax shows that they are not fit to govern. When we called for a windfall tax, they wasted months opposing it before finally changing course. Now they are undermining their own windfall tax with a new tax break for oil companies. When it comes to the long-term challenges we face, they simply do not have the plans we need for the future. That goes for the former Chancellor, the current Chancellor and all the Conservative leadership candidates as much as it does for the outgoing Prime Minister. Changing the person at the top of the Conservative party will not change anything. We need a change of Government, and that means we need a Labour Government.