Energy (Oil and Gas) Profits Levy Bill

Nigel Evans Excerpts

2nd reading
Monday 11th July 2022 Commons Chamber

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I ask Members to respect the maiden speech conventions as I call and welcome Simon Lightwood.

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[Mr Deputy Speaker (Mr Nigel Evans)]

Congratulations on your maiden speech. You will remember this day forever.

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[Wera Hobhouse]

I could not agree more. The Government have dithered and delayed. They could do something about it and back our amendment, which would ensure that the new levy on oil and gas companies is backdated to last October. That would at least reflect the dither and delay and do something about it.

What should we make of the proposals to exempt those companies investing in new oil and gas exploration? There is nothing in the Bill to incentivise investment in renewables. That flies in the face of the Government’s commitment to get to net zero. In fact, it demonstrates once more how quickly they are prepared to U-turn on their promises, making it harder for struggling households to get on top of soaring energy bills now and in future and failing to take serious action on climate change. What is more, where is the programme to transform the pace of home insulation, which is lagging shockingly behind? Where are the planning laws to ensure that we build zero-carbon homes now rather than allowing developers to build homes that will require very costly retrofitting in a few years’ time?

We need bold and swift action to help families with the soaring cost of living and energy prices. The cheapest form of energy is onshore wind. When will the Government drop their effective ban on onshore wind and turbo-charge its revival? That would be the surest way to help struggling households to bring their energy bills down in the near future. The Government, however, can only fire-fight, and they have no vision and no real ambition.

Under Liberal Democrat plans, we would cut most emissions by 2030. That would be good not only for the climate, but for people’s pockets as we wean ourselves off global oil and gas markets as soon as possible. The Government have to come clean on the fact that even if gas and oil are produced in the UK, that will do nothing for household energy costs, because the price of oil and gas is fixed globally, not nationally.

On new green jobs, cleaner air, warmer homes and lowering living costs, the levy could have done so much more. We Liberal Democrats support the Bill but deplore the lack of a much greater ambition from the Government to rein in soaring energy costs and tackle the climate emergency.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call the shadow Minister, Abena Oppong-Asare.

Energy (Oil and Gas) Profits Levy Bill

Nigel Evans Excerpts

Committee stage
Monday 11th July 2022 Commons Chamber

Question proposed, That the clause stand part of the Bill.

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

With this it will be convenient to consider the following:

Amendment 9, in clause 2, page 2, line 42, at end insert

“, which may include electrification investment that decarbonises upstream oil and gas activities”.

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

Clause 2 stand part.

Clauses 3 to 11 stand part.

Amendment 1, in clause 12, page 9, line 32, after “levy” insert

“and the amount of tax relief on additional expenditure treated as incurred that the responsible company is claiming under section 2 of this Bill.

(2A) The data submitted by responsible companies under subsection (2) of this section must be published in aggregate on a quarterly basis.”

This amendment requires companies making a payment of the levy to also provide information to HMRC about the amount of extra tax relief they are claiming under section 2 of the Bill, and requires the total amounts of levy received and tax reliefs claimed every quarter to be published.

Clause 12 stand part.

Clauses 13 to 19 stand part.

That schedule 1 be the First schedule to the Bill.

That schedule 2 be the Second schedule to the Bill.

New clause 1—Assessment of revenue effects of a higher Energy Profits Levy—

‘The Chancellor of the Exchequer must, no later than 30 September 2022, lay before the House of Commons an assessment of the effects on—

(a) tax revenues, and

(b) oil and gas company profits

of the Energy Profits Levy being charged at 45%.’

This new clause would require the Government to publish an assessment of the effect on tax revenues and on oil and gas company profits of charging the Energy Profits Levy at 45% rather than 25%.

New clause 2—Review of the impact of tax relief on additional expenditure treated as incurred—

‘The Chancellor of the Exchequer must, by 26 August 2023, publish an assessment of the impact of the tax relief provided by this Act on the UK’s energy market, including the impact on—

(a) net zero obligations;

(b) energy security;

(c) renewable energy supplies; and

(d) fracking.’

This new clause requires an assessment, within three months of the end of the first year of the levy being in place, of what impact the Bill’s extra tax relief for investment expenditure by oil and gas companies would have on the UK’s net zero obligations and other aspects of the energy market.

New clause 3—Review of impact of earlier start date of the levy—

‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of how much the levy would have raised between 9 January 2022 and 25 May 2022 if it had been in place from 9 January 2022.’

This new clause requires an assessment, within three months of the Bill becoming law, of how much extra revenue would have been raised if the levy had been introduced on 9 January 2022 rather than 26 May 2022.

New clause 4—Review of the amount of tax relief on additional expenditure treated as incurred—

‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of—

(a) how much tax relief on additional expenditure treated as incurred under sections 2 to 7 of this Act will be claimed; and

(b) how much of the tax relief expected to be claimed is estimated to be in respect of investment that would have taken place if the tax relief had not been in place.’

This new clause would require the Government to assess the amount of tax relief for investment expenditure introduced by this Bill expected to be claimed by oil and gas companies, and to estimate how much of this is a deadweight cost.

New clause 5—Review of the impact of limiting the scope of the tax relief on additional expenditure treated as incurred—

‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the impact of making ineligible for the tax relief on additional expenditure treated as incurred any investments that—

(a) do not align with the IEA’s net zero emission scenario for a 1.5 degree temperature increase;

(b) have been announced before 26 May 2022; or

(c) are incurred by companies that have engaged in share buy-backs in the three previous financial years.’

This new clause would assess the impact of limiting the scope of the tax relief introduced by this Bill to exclude investments on the basis of their impact on climate change, whether they had already been announced, and whether the company making the investment had engaged in share buy-backs in the last three years.

New clause 6—Environmental impact of exploration activity on which levy relief is claimed—

‘The Government must undertake an environmental impact assessment in relation to any claim for relief in respect of exploration activity, which must include an assessment of whether the exploration activity is consistent with the Government’s net zero commitments.’

This new clause would require the Government to assess against its net zero commitments any investment in oil and gas exploration activity against which levy relief is claimed.

New clause 7—Regular reviews in relation to oil and gas market—

‘The Government must publish a review of the oil and gas market by 26 November 2022 and every six months thereafter during the period of the levy, which must include an assessment of—

(a) whether there is a continued need for the levy, and

(b) whether the levy should be continued in order to promote further decarbonisation of upstream oil and gas activities.’

This new clause would require a six-monthly review by the Government of the oil and gas market to assess whether the levy is still needed and whether it should continue in order to promote decarbonisation of upstream oil and gas activities.

New clause 8—Assessment of revenue from a permanent levy rate of 30%—

‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the expected change in levy revenue if the levy is set at a permanent rate of 30% so that taxation on oil and gas company profits was permanently set at 70%.’

This new clause would require the Government to produce an assessment of the amount of revenue which would be generated if the level of taxation on oil and gas company profits was permanently raised to the global average of 70%.

New clause 9—Assessment of levy revenue if investment relief not permitted—

‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the revenue that the levy would yield if no relief was permitted in respect of investment expenditure.’

This new clause would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if the investment allowance were removed.

New clause 10—Assessment of investment allowance on compliance with climate change targets—

‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the impact of the levy investment allowance on compliance with the requirements of the Climate Change Act and the global agreement to limit global heating to 1.5 degrees.’

This new clause would require the Government to produce an assessment of the impact of the investment allowance on achieving Net Zero by 2050 and limiting global temperature increase to 1.5 degrees.

Just to remind everyone: as I am sitting down here, I am the Chair of the Committee and not Mr Deputy Speaker, so it is “Mr Evans”, “Chair” or “Chairman”. Anything like that will do.