Levelling-up and Regeneration Bill

Debate between Lucy Frazer and Caroline Lucas

Report stage
Tuesday 13th December 2022 Commons Chamber

[Lucy Frazer]

I can give a confirmation that there will be some transitional provisions enabling local councils to proceed with the plan that they are about to adopt, but if they want to reflect, there will be an opportunity to do that as well. We believe that we are improving the system through the measures that we have set out.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the right hon. and learned Lady accept that we also need to level up access to green space and nature? Right now, the distribution of green space is very unequal; many people on the lowest incomes simply do not have access to green space at all. Will she look at my new clause 13 and look again at the whole issue of ensuring a right of access to good green space?

[Lucy Frazer]

As I mentioned just now, the Bill is not just about building; it is also about protecting the environment. A number of measures in the Bill will ensure that we protect our natural spaces—30% of our nature—and our local nature recovery strategies, which are due to begin across England as soon as possible, were committed to in the Environment Act 2021.

Energy (Oil and Gas) Profits Levy Bill

Debate between Lucy Frazer and Caroline Lucas

Committee stage
Monday 11th July 2022 Commons Chamber

[Caroline Lucas]

The hon. Gentleman puts it perfectly succinctly and I very much agree.

It has been estimated that existing decommissioning relief deeds could enable the extraction of the equivalent of 1.7 billion barrels of oil that otherwise would have remained unextracted, and that will only increase if we continue with the vicious cycle of handsomely subsidising fossil fuel companies to exploit oil and gas reserves. In response to the Glasgow Climate Pact’s call for parties to

“phase out inefficient fossil fuel subsidies”,

the Climate Change Committee said that the Treasury should initiate a review of the role of tax policy in delivering net zero, and was very clear that no fossil fuel subsidy should be considered efficient in the UK. Will the new Chancellor now commit to that review, listen to his own Climate Change Committee, and take its advice?

New clause 10 would require the Government to produce an assessment of the impact of the investment allowance on achieving net zero and on limiting the global temperature increase to 1.5°. It is frankly astounding that the Government need to be reminded yet again that the IEA has been clear that limiting global temperatures to 1.5° necessitates

“no new oil and gas fields approved for development”

as from last year. Yet according to the United Nations Environment Programme, the level of fossil fuel production planned and projected worldwide by Governments in 2030 is more than twice the levels consistent with that goal. The UK has given North sea oil and gas companies almost £14 billion in subsidies since signing the Paris agreement in 2015 alone. This Bill was an opportunity for the Government to change course, but instead they have chosen to double down and to play with fire by bringing forward a Bill that is plainly incompatible with a safe future.

It is patently obvious that the Government should amend the Bill to ensure that oil and gas profits are taxed properly, but I believe fundamentally that that should pave the way for a much wider overhaul of our tax system. We need a carbon tax, which, if implemented properly with a dividend to shield low-income households, could be pivotal in driving the change we need in order to decarbonise our economy fairly. That tax—it has long been Green party policy—would target the big polluters such as oil and gas companies. It is estimated that, starting at a rate of about £100 per tonne of CO₂, it could generate up to £80 billion to fund the transformation necessary to achieve our climate goals. That is the kind of innovative policy we need right now to save ourselves from the climate emergency that is only growing deeper.

[Lucy Frazer]

Many of the points that have been raised in Committee were considered on Second Reading, but I would like to touch on a few of them and then deal with amendments.

The hon. Member for Ealing North (James Murray) asked how the new investment allowance works. On 6 June, I said I was very happy to look further at this point, and I can reassure him that the investment allowance within the levy will be generated on investment expenditure —that is, capital expenditure and some operating and leasing expenditure—incurred on or after 26 May. The legislation includes an anti-avoidance provision to prevent any recycling of existing assets from getting the allowance, and that is all very clearly set out in clause 6.

I want to deal with some of the points made by my hon. Friend the Member for South Thanet (Craig Mackinlay), because I understand his objections, and no Conservative wants to bring in a tax rise where it is not necessary. I have had the opportunity to talk to him on a number of occasions about these measures, and he will know that they are targeted and temporary. He says he fears for investment coming through, but of course that will be assessed by the OBR in due course. I am not sure whether he was in the Chamber earlier when I quoted some companies that have said that they will be investing and that this encourages investment, but I will mention a further one. Kistos has said that it is

“assessing opportunities in the UK that would enable us to take full advantage of the investment allowances implicit in the recently introduced UK Energy Profits Levy”.

I turn to the amendments. Amendment 1 would require companies to report on how much additional tax relief they are claiming as a result of the levy’s investment allowance, in addition to the existing requirement to report how much levy is payable. The amendment would also require that data to be published on a quarterly basis. Companies will already be reporting the information to HMRC that allows it to ensure appropriate compliance with the law, and figures on the amount of tax raised through the levy will also be published on a periodic basis in line with other taxes. As a result, this amendment should not be made to the Bill.

Amendment 9 would add clarification to the allowable purposes of expenditure under the levy’s investment allowance. I have already dealt with that point on Second Reading, and I confirm to the Committee that HMRC will clarify this in written guidance.

New clause 1 calls for an assessment of the impact on revenue and on oil and gas companies’ profits of a 45% levy rate. Similarly, new clause 8 calls for assessments of the revenue impact of a permanent 30% levy rate, which would bring the permanent headline rate of tax for oil and gas companies in ringfence corporation tax to 70%. However, it is not standard—I will be saying this in relation to a number of new clauses—for the Government to publish assessments of the fiscal and economic impacts of measures that they are not introducing, and it is not clear that doing so would be a beneficial use of public resources. Therefore, I recommend that the Committee rejects these new clauses.

Again, new clauses 3, 5 and 9 would require reviews or assessments of policies that the Government are not introducing. New clause 3 would require a review of the revenue that would have been raised had the levy taken place from early January. I set out on Second Reading why we did not bring forward this measure earlier, and I did so last week as well. We are not supporting these measures because, as I have said, it is not usual to bring forward public assessments of measures that we are not introducing.

New clauses 2, 6 and 10 would require reviews or assessments of the impact of the investment allowance on the energy market, climate change commitments and exploration activity. The Government oppose these amendments on the basis that the Treasury already carefully considers the impact of all measures on the energy market and our climate change commitments as a matter of course.

New clause 4 would require a review of the amount of investment allowance that will be claimed and how it relates to expenditure that would have happened were the investment allowance not in place. The first point to reiterate here is that the Government expect the combination of the 25% levy and the 80% investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in the next forecast. HMRC already publishes data on the costs of non-structural reliefs, which will include the investment allowance in due course, once data is available.

Finally, new clause 7 would require the Government to publish regular reviews of the oil and gas market, including assessments of the need for the levy and whether it should be continued to promote further decarbonisation of upstream oil and gas activities. That is also unnecessary, since the Government already monitor the UK oil and gas sector, and data is published on gov.uk on a monthly and quarterly basis.

For all the reasons I have set out, I urge Members to reject all the amendments and new clauses. I commend the clauses and schedules to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Additional expenditure treated as incurred for purposes of section 1

Amendment proposed: 9, page 2, line 42, at end insert

“, which may include electrification investment that decarbonises upstream oil and gas activities”.—(Stephen Flynn.)

This amendment would put on the face of the bill that electrification investment which decarbonises upstream oil and gas activities is eligible for relief.

Question put, That the amendment be made.

North Sea Oil and Gas Producers: Investment Allowances

Debate between Lucy Frazer and Caroline Lucas

Monday 6th June 2022 Commons Chamber

[Lucy Frazer]

With the greatest respect, I think that the hon. Member misunderstands the policy. What we are introducing is a significant tax on the oil and gas sector that will fund the most vulnerable, so it is the firms handing money over, as he puts it, to us. We have said that we recognise that companies should invest, because it is good for jobs, good for investment, good for our competitive industries and good for our energy security for the future. We have recognised that we will give tax reliefs if that investment is made.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Just six short months ago, the UK hosted COP26, and it remains its president—not that we would know that from this appalling policy from this Government. The Glasgow climate pact, which the UK signed, commits to the

“phase-out of inefficient fossil fuel subsidies”,

so can the Financial Secretary explain on what grounds handing an 80% tax break to the dirty, dangerous and outdated energy of the past could possibly be considered efficient, especially when new fossil fuel production will do nothing to help with energy security or affordability? It will simply be sold at global prices on international markets. How is that climate leadership?

[Lucy Frazer]

The hon. Lady will know that we need to ensure energy security. At the moment, oil and gas account for 50% of our domestic energy. It is important that we transition, but that we transition safely, as well as securing domestic energy security.

The hon. Lady makes a very important point about our leadership at COP. We led the world. We were the first country to introduce net zero targets; many others followed. The Chancellor set out packages to ensure private sector investment and Government support for transitioning, and that is what this Government are doing.

Oral Answers to Questions

Debate between Lucy Frazer and Caroline Lucas

Tuesday 1st February 2022 Commons Chamber

[Lucy Frazer]

If the hon. Member wants to give me the details of her constituent’s case, I would be very happy to look into it.

[Caroline Lucas (Brighton, Pavilion) (Green)]

4. What assessment he has made of the compatibility of his policies on the taxation of fossil fuels with the Glasgow climate pact.

[The Financial Secretary to the Treasury (Lucy Frazer)]

I am pleased to have an opportunity to underline the Government’s commitment to reducing carbon emissions through taxation and the UK’s success in limiting global emissions at COP26. The Government have reduced carbon emissions through their carbon pricing policies, including through the UK emissions trading scheme. We are committed to delivering on our carbon targets, and our net zero strategy sets out a roadmap for reaching net zero by 2050.

[Caroline Lucas]

I thank the Minister for her answer, but she will know that the UK has one of the most lax tax regimes in the world for the oil and gas sector. In 2019, companies got away with paying 12.5 times less tax for a barrel of oil produced here compared with in Norway, for example. In 2020, Shell paid absolutely no tax in the UK, the only country in the world where it operates where that was the case. For 2021, HMRC expects that the industry will pocket £910 million-worth of tax reliefs for decommissioning. Given our commitments under the Glasgow climate pact, and given the fact that the oil and gas industry is currently making near-record profits while UK households are struggling with a real cost of living crisis, will the Minister address the imbalance and commit to a review of the tax regime?

[Lucy Frazer]

The hon. Member will know that the oil and gas sector does pay significant taxes. Indeed, it pays additional taxes, and to date it has paid more than £375 billion in production taxes.