Energy Profits Levy

Lord Livermore Excerpts

Tuesday 9th May 2023 Lords Chamber

[Baroness Penn (Con)]

My noble friend is right. That is why the Government have always sought to deliver a balance between a fair return for the UK from the use of its resources and providing the right conditions to attract investment in the North Sea. That is why we have the investment allowance in the EPL that provides an additional incentive for companies to reinvest profits in the UK. On the point about environmental impact, the level of tax relief available for upstream decarbonisation expenditure was increased from January this year to incentivise companies for the cleaner production of oil and gas.

[Lord Livermore (Lab)]

My Lords, the Government’s energy levy leaves billions in excess profits on the table while many households struggle through an unprecedented cost of living crisis. Only last week BP announced quarterly profits of over £6 billion while Shell recorded a quarterly profit increase of 22%, handing a further £5 billion to shareholders and now allocating more to dividend payments alone than to its entire investment in renewables. Given that, and with households and small businesses facing sky-high energy bills, how well does the Minister think the current levy is working?

[Baroness Penn (Con)]

I welcome the noble Lord to the Front Bench. He referred to figures that are the global profits of companies. As I have said to his noble friend, the UK applies its windfall tax to UK profits, and I think that is the Labour proposal also. Abolishing the investment allowance would be counter-productive. As I have said, the UK is still reliant on gas for its energy supply. Reducing incentives to invest would lead to investors pulling out of the UK, damaging the economy, causing job losses and leading to lower future tax revenue—tax revenue that we have used to put in place unprecedented cost of living support to families, which is still going out to households at the moment, so that those who are worried about their bills who are on low incomes and means-tested benefits can look forward to more support coming from the Government over the next year.