Taxation (Energy and Vehicles) Bill

Matt Western Excerpts

2nd reading & Committee of the whole House
Wednesday 1st July 2026 Commons Chamber

[The Economic Secretary to the Treasury (Rachel Blake)]

I beg to move, That the Bill be now read a Second time.

The conflict in the middle east has left British families and businesses exposed to volatile gas prices, which has made things more expensive for those who drive for work, including care workers. Even though much of the country’s electricity comes from cheaper renewables and nuclear, electricity prices are still largely set by gas, which means that running a wash, turning on the lights or boiling the kettle has also become more costly for families across the UK. As my right hon. Friend the Chancellor set out in May, the Government are keenly aware of the costs that the conflict in the middle east will impose on British people. The Government have taken steps to put our economic security and national security first. The Chancellor has committed to doing what she can to support families and businesses; to being responsive to a changing world; and to being responsible, in the national interest.

Some legacy renewable energy generators stand to benefit from the disparity when higher gas prices determine the price of electricity. Without any new costs or risks, those generators receive extraordinary revenues. The electricity generator levy already recoups some of the excess returns made by renewable generators when electricity prices are over £82.61 per MWh, but the Government have decided to increase the rate of the levy from 45% to 55% from today, 1 July.

The rate rise will have two main benefits. It will ensure that a larger proportion of any exceptional revenues from high gas prices are passed back to the Government. That will provide a vital revenue stream, so that money is available to the Government to support businesses and families with the impact of the conflict in the middle east. In the longer term, the increase in the EGL rate will also encourage participation in the new voluntary contract for difference scheme, announced in April—part of a broader package of measures that break the link between electricity and gas prices. Importantly, new investment is excluded from the levy. This ensures that the measure is targeted solely at legacy windfall returns, and does not deter future clean energy development.

In March, the Government announced a review of mileage rates for employees who use their own vehicle for work, and for the self-employed who use the simplified expenses rates. In recognition of the pressures facing drivers as a result of the conflict in the middle east, my right hon. Friend the Chancellor announced in May the first uprating of mileage rates in 15 years. It was backdated to April, to provide immediate support to both groups. Mileage rates will increase for 2026-27 from 45p to 55p for the first 10,000 miles and 25p thereafter, with effect from 6 April 2026.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend is making an excellent speech. This is fantastic news for my constituents, my farmers and my businesses. Does she welcome the statement from the End Fuel Poverty Coalition, which said that increasing the rates of approved mileage allowance payments is absolutely the right thing to do right now?