Energy Profits Levy

Lord McNicol of West Kilbride Excerpts

Tuesday 9th May 2023 Lords Chamber

Asked by

[Lord McNicol of West Kilbride]

To ask His Majesty’s Government what assessment they have made of the impact of the Energy Profits Levy on energy companies.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

The energy profits levy was introduced to respond to extraordinary profits in the oil and gas sector and includes an investment allowance to encourage companies to reinvest their profits in the UK. It has raised £2.8 billion to date and is expected to raise almost £26 billion by March 2028, in addition to around £25 billion from the permanent regime over the same period.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for her response. We have all seen the eye-watering profits of the oil and gas companies. The energy profits levy does not treat all companies the same. Many of the largest companies pay considerably less, with their profits and extraction being largely outside the UK. This is not the same for many of the smaller domestic UK producers. Moreso, the EPL has a more favourable capital relief than the electricity generator levy. How can the Government justify a levy that gives favourable treatment to oil and gas companies over renewable developers?

[Baroness Penn (Con)]

On the noble Lord’s first point, he is right that the energy profits levy is applied to profits made in the UK or on the UK continental shelf. That is in line with other profit-based taxes on companies that operate in the UK and overseas. On the difference between the energy profits levy and the electricity generator levy, they are structured in completely different ways. The headline rates of those two taxes are also completely different. We have different programmes in place to ensure that we incentivise continuing investment in our renewables, which is why we have such a great track record on delivering renewable energy in the UK.