Oil and Gas Producers: Windfall Tax

Julie Elliott Excerpts

Tuesday 1st February 2022 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

In starting my contribution in support of Labour’s proposal, I would like to consider what it is actually about. We have heard a mass of iteration in support of the oil and gas industry, but this debate is about the cost of living crisis hitting families in all our constituencies across the country, and I am afraid I heard no mention of that during the last contribution.

I support the proposal for a one-off windfall tax on the profits of North sea oil and gas producers—a one-off tax that will help families and businesses across this country as they face enormous rises in their energy bills. Windfall taxes have been used before and could be used again. This is a one-off measure to try to help the immediate situation facing every one of our constituents in this country.

There is no doubting that the energy market is in chaos; it has been for a decade or more. For many years, I was the shadow energy Minister, and seven years ago we were here talking about the very same thing. This measure will not solve the crisis, but it will help alleviate the massive impact that the cost of living, including energy prices, is having at the minute. Twenty-seven companies have gone bust in the sector since September. Customers are being transferred to new suppliers. That is also a crisis: although Ofgem says that money built up through direct debits will be transferred to the new suppliers within 70 days, that is not happening. Some of my constituents are having to pay bills now when they have hundreds and hundreds of pounds in the bank with the previous suppliers, without that money being used to offset. They have the threat of debt collectors coming to their homes if they do not pay the bills. That needs addressing by the Government as well.

The energy price cap is supposed to protect customers, but last October bills went up by 12%. We are expecting them to go up by 50% or more next time in April, and my constituents cannot afford that. The cost of living is going up all the time, but wages are not going up at the same rate. As of November, inflation was at 5.1% and wages were rising by 3.5%—a real-terms cut of more than 1.5% on average prices. And then we are going to be hit with the rise in energy prices.

I represent Sunderland in the north-east of England—an area where many people work in the oil and gas industry, which I know very well. Rounded up average earnings in the north-east are £28,000 a year, while in London they are £38,000 a year, yet energy prices are the same. How are my constituents going to pay for that enormous rise in energy prices? No one can afford it, and Sunderland and the north-east can afford it least.

The energy market is broken; as I have said, we have known that for years. People need help now while other things go on to try to fix the disaster in the energy market. I heard nothing from the Minister to suggest how the Government will address this real crisis hitting every one of our constituents. It has nothing to do with politics. The energy bills of every person in this country are going up enormously in a couple of months’ time. If the Government do not accept our motion for a one-off windfall tax, or our call for a cut in VAT, what are they going to do?

We are now at a point where warm words simply are not enough. We need action from the Government to help every one of our constituents in this crisis that means people will not be able to pay for their energy supply. This utility is essential to every person in the country, so I look forward to hearing what the Minister has to say in summing up. Something simply has to be done.