Oil and Gas Producers: Windfall Tax

Kerry McCarthy Excerpts

Tuesday 1st February 2022 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

I do not know whether any of my colleagues present listen to the “Political Thinking with Nick Robinson” podcast, but the Leader of the House was the guest on Saturday, and it was interesting to note that he referred to the cost of living crisis. He was using it as an excuse to avoid talking about Downing Street parties, but the fact that he acknowledged that we have a cost of living crisis is something he may need to go and discuss with the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for North East Derbyshire (Lee Rowley), who opened this debate.

People will know that the Leader of the House is my constituency neighbour, and he may have popped across the border to buy some fish and chips, although I think that is unlikely. If he did, he might have spoken to a fish and chip shop owner who got in touch with me recently to say that his gas and electric bill has increased fourfold in the past three months. That is simply unsustainable and he cannot pay it, so a valued business that has served the community for more than 30 years now faces closure. The same scenario is playing out across the country in people’s homes and businesses, with April’s price cap rise looming large.

Surging gas prices are a global issue, but the extent to which the consequences are allowed to crush consumer and businesses finances is a Conservative issue. While bill payers grow increasingly anxious about how they will make ends meet, UK oil and gas producers are making near-record profits, on a scale not seen since before the 2008 crash. The industry has suggested that to tax it more would deter investment in renewables, and we have heard some comments of that nature from the Government Benches today, but the fact is that the UK is one of the most profitable countries in which it operates, because of the favourable tax environment.

Despite David Cameron’s pledge to lead “the greenest Government ever”, measures introduced by his Chancellor have meant that many oil and gas companies have paid negative tax in recent years. Despite our commitments at COP, oil and gas producers are rushing to taking advantage, determined to exploit to the max what is left of our fossil fuel reserves, instead of doing as we should and keeping it in the ground. It is not just environmentalists who say this: there is a very sound business case, if we listen to people such as Lord Adair Turner.

The current regime just cannot be reconciled with our climate commitments. The long-term solution to this crisis is not churning out more fossil fuels, but switching to sustainable energy sources to avoid a reliance on volatile gas markets. That means investing now in renewable energy, insulation of homes and installation of heat pumps, rather than kicking the can down the road, as this Government have done with their net zero strategy.

The Chancellor needs to act on this issue, but until he does, oil and gas producers need to pay their fair share of tax rather than expecting energy bill payers to pick up the tab for them. If Tory MPs—I see there are only one or two left in the Chamber—care about their constituents and the cost of living crisis, they should join Labour in the Division Lobby tonight. Rather than adopting Labour’s plans to prevent millions from falling into fuel poverty, the Government, in presiding over wage stagnation, universal credit cuts and a national insurance hike, have accelerated that process.

The owners of local cafés, barbers and bakeries did not have the luxury of jetting off to California like the Chancellor did when the going got tough over the Christmas period; they were struggling to keep going despite the supply chain issues, depleted workforce and rise in inflation. Was expecting the Chancellor to be doing his job too much to ask? At least Labour is here today doing the Chancellor’s job for him. The £600 million contingency fund proposed by Labour offers tangible and immediate support to businesses and families crippled by inflation. Our plan to cut VAT on energy bills—which, incidentally, the Government used in the referendum campaign as a reason to support Brexit—and to roll out targeted support would take hundreds of pounds off most households’ monthly costs. In rejecting the windfall tax on oil and gas companies, the Government send a clear message to millions of families and business owners across the UK that when it comes to choosing which side they are on, they care more about the oil and gas producers profiting and polluting than they do about keeping pensioners warm this winter.