Energy Profits Levy

Lord Leigh of Hurley Excerpts

Tuesday 7th February 2023 Lords Chamber

[Baroness Penn (Con)]

The noble Baroness will know that the tax regimes for the two sectors are quite different. Oil and gas already has a specific tax regime that is higher than for electricity generators, which pay normal levels of corporation tax. This levy is on top of that for their profits related to the price for gas, which were unforeseen when they were making their investments. I agree that we need more support for investment in renewables. The Government have committed £30 billion towards our domestic green industrial revolution over the coming years.

[Lord Leigh of Hurley (Con)]

My Lords, in the debate on the Finance Bill, I raised the concern about the unintended consequences of the energy profits levy. Now that a little time has elapsed, has the Treasury had the opportunity to assess the impact particularly on independent, smaller oil companies? They have said that they no longer have the certainty and cash flow to make the same investment in the UK as they thought they would do previously, which will lead to an uneconomic and environmentally unfriendly increase in imports of oil and gas.

[Baroness Penn (Con)]

I can reassure my noble friend that the Government have been engaging with the sector, including independent, smaller oil and gas companies. We have included the investment allowance precisely to try to strike the right balance between funding cost of living support while encouraging investment to improve our energy security. My noble friend is right that we should look at the carbon intensity of production here in the UK versus the carbon intensity of importing gas from elsewhere.