Energy (oil and gas) profits levy

Nigel Evans Excerpts

Tuesday 22nd November 2022 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

I think that Madam Deputy Speaker suggested eight minutes for speeches. We have had some slippage on that with a few speakers. So could people try to stick to that figure? You will do that, won’t you, Mr Bell?

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[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the right hon. Member for Hayes and Harlington (John McDonnell), who outlined the serious situation we all face in the economy and given the pressure on household incomes. He delivered his speech in a sombre tone that was not too dissimilar to that taken by the Chancellor last week. That is unsurprising, given that the statement was delivered against the backdrop of such high inflation and low growth, and forecasts that household disposable incomes are set to fall significantly. Given such dire economic circumstances, I was pleased that common sense prevailed and measures such as the retention of the triple lock on the state pension and the uprating of many of the benefits in line with inflation were progressed at last week’s statement. I am happy to say that they will be of great benefit and support to a high number of my constituents.

Nevertheless, I wish to outline a few of my thoughts as to why the balance between addressing the immediate inflationary pressures that everyone is facing and the longer-term productivity problems that have afflicted the economy for several years was not quite right last week. For households across Wales, last week’s statement risks offering little more than a continuation of the managed decline we have sadly come to expect. That reality was underlined by the Wales Governance Centre’s calculation that, on the present trajectory, Welsh incomes will be £10,300 lower by 2027 than they would have been had pre-financial crisis levels of growth been sustained.

If we are to have any hope of reversing that trend, the Welsh economy needs concerted investment in our underlying infrastructure: our power grid; our transport links; and digital connectivity. Many Members have spoken before about the importance of digital infrastructure and transport links, so I will not detain the House on those points, but it is worth reiterating the importance of investing in the power grid.

The Welsh Affairs Committee has been undertaking an inquiry on the potential for offshore wind generation off the coast of Pembrokeshire, in south-west Wales. We received a lot of evidence from stakeholders to show that, if that fantastic potential is to be realised and we are to progress with a cutting-edge, new industry—the manufacture, production and installation of offshore wind turbines—that is centred in south-west Wales, bringing incredibly high-wage and important careers, we need to invest in the grid to ensure that a lot of that power can be connected and fed into the UK’s grid. We need to press on and be honest with ourselves that, with the current state of play, a lot of that potential cannot be realised, it needs to be looked at again by the National Grid and, potentially, it needs further Government investment.

Likewise, the Government need to be honest on the question of our trading relationship with our nearest trading bloc. The OBR report concluded again that the UK’s trade intensity will be some 15% lower in the long term because of our new trading relationship with the EU. The UK Government can take practical steps now to help to ameliorate that economic pain by removing unnecessary trade friction, which has devastated the operations of many businesses in Ceredigion, which are finding it nigh on impossible to export goods to the EU.

I know that that is a debate for another time, but there are mutual recognition agreements that we could be exploring. If that is a step too far, I would like us to see what support there is in terms of resource and advice for small businesses in particular, many of which in my constituency are finding it very difficult to navigate the new rules. They are finding it incredibly difficult, for example, to know how to get confirmation that they are using the right goods classification code before an export or, indeed, before an import arrives at port. These are practical ways that could greatly help small businesses in places such as Ceredigion to improve a bit on their trade with the European Union. A failure to address that issue now will simply pass on the burden to future generations.

The same is true on the question of energy security. We now know that, from April 2023, energy bills will surpass the £3,000 limit. To give a sense of the impact that this increase will have, it is worth recalling that, in April this year, the Welsh Government estimated that average bills of more than £1,900 a year could push up to 45% of all households in Wales into fuel poverty, with 8% thrown into severe fuel poverty.

Given the scale of the crisis, efforts should focus on permanently reducing the impact of energy bills on households across these islands. The inefficiency of our housing stock means that households are wasting hundreds of pounds a year on energy that escapes through draughty walls, leaky windows and ceilings. That issue is particularly acute in Wales given that we have some of the oldest and least efficient housing in western Europe. The Chancellor acknowledged that issue during his statement last week, yet his answer to today’s problem is to bring forward new funding in 2025.

We are already paying the price for a lack of action in this area. The New Economics Foundation recently estimated that, if all homes in England and Wales were rated EPC C, UK Government spending on the energy price guarantee would have been around £3.5 billion less over six months and households—just as important perhaps—would save around £530 over the next year. Additional funding in home energy efficiency measures should be accelerated and would be worth every single penny.

Direct help to facilitate energy efficiency improvements now can also protect businesses from similar energy shocks in future. I encourage the UK Government to look at proposals that have been put forward by the Federation of Small Businesses, which has called on the UK Government to issue vouchers worth £5,000 for small and medium businesses to spend on qualifying energy-saving products and services.

Many of my colleagues have already touched on this topic, but I make no apologies for reiterating some of the concerns with regard to off-grid households and businesses. I plead with those on the Treasury Bench to provide greater clarity on the support for off-grid homes. The Chancellor told us last week that the support was being doubled from £100 to £200 and that the first payment was introduced to coincide with the first six months of the energy price guarantee. Given that the scheme for households who are connected to the grid will be extended, albeit at a reduced rate, from April, can off-grid homes expect a second round of the alternative fuel payment?

If I can be so bold, I would like to ask a few questions. When are we expecting these payments to be brought forward? I know that households are finding it very difficult now. We have just had a bit of a cold spell, so this is very much at the front of people’s minds. It is the same for off-grid businesses. It is unfortunate that many are starting to make very difficult decisions. Any clarity that can be given by the Government as to what sort of support they will be entitled to and when it will be brought forward could go a long way in helping them with some of their plans for the next six months.

I welcome the UK Government’s commitment to uprate many benefits in line with inflation, but I am concerned that they have been inconsistent in their approach by failing to uprate some others in line with inflation. In particular, they have failed to uprate the level of support available for rental costs via the local housing allowance, which is having a devastating impact. Wales is experiencing the second fastest growth in rental costs across Great Britain, which means that the gap between housing benefit and the cheapest rents is rising at a rapid pace. Less than 1% of private rented homes in Wales are affordable to low-income renters. I regret to have to report to the House that, in Ceredigion, it means that those in receipt of the benefit will need to earn a staggering £3,382 more per year to afford the cheapest rent.

In conclusion, will the Government bring forward much-needed support for renters in my constituency by looking again at the freeze on the local housing allowance and uprating it annually to match at least the 30th percentile of market rents? I fear that failing to move on this matter will condemn a great many people to homelessness this winter.

[Mr Deputy Speaker (Mr Nigel Evans)]

Any Members who have taken part in the debate should really make their way to the Chamber now for the wind-ups, which will follow Beth Winter.

[Beth Winter (Cynon Valley) (Lab)]

It is a pleasure to follow the hon. Member for Ceredigion (Ben Lake), who outlined the acute problems facing Wales and who, like me, is a vociferous campaigner for better needs-based funding for Wales.

Both the Prime Minister and the Chancellor have been at pains to state their intention to deliver stability following the Tory mini-Budget that crashed the economy, but it is worth asking what kind of stability they are talking about. Stability for whom? Some 14 million people in the United Kingdom currently live in poverty, and the Chancellor has delivered an autumn statement that will force millions more into poverty, all in the name of stability.

Inaction on pay and public service funding and stealth taxation on low and middle incomes in this statement have made people’s lives more unstable, precarious and difficult. That is certainly the case for people and communities in my Cynon Valley constituency. The Welsh Finance Minister, Rebecca Evans, was clear that inflation has eroded the Welsh Government’s budget.

I listened earlier to the hon. Member for Clwyd South (Simon Baynes) commenting on health issues in Wales, and others have also spoken about health problems. The fact of the matter is that the settlement over the spending review period is worth less in real terms in Wales than it was at the time of spending review last year and includes a £1.1 billion shortfall compared with when we were a member of the European Union.

We need to see the Welsh budget increased in line with inflation, but that has not happened. The Welsh Local Government Association is clear that cuts will have devastating consequences for communities. The leader of the WLGA, Andrew Morgan, who is also the council leader for my constituency, stated that

“instead of avoiding disaster, this Autumn Statement is headed straight for the danger.”

My constituency faces a deficit of around £47 million next year. There is nowhere else to cut. People are frightened—they are at their wits’ end.

Moving to incomes, the historic fall in real incomes is due to concrete decisions taken by the Chancellor and his predecessors. The Tories are driving down pay and, to justify it, many are making false claims of a wage-price spiral. But pay is not driving inflation; it is lagging behind. The reality is that a Tory low pay agenda has existed since 2010: pay freeze after pay freeze, devaluing and demeaning our key workers. With no dedicated announcement on public sector pay, key workers now face further real-terms reductions in pay.

My right hon. Friend the Member for Hayes and Harlington (John McDonnell) outlined the difficult situation facing our key workers. To add to that, the Resolution Foundation has said that real wages should be around £15,000 higher based on past trends, and the TUC says that real earnings will not return to 2008 levels until 2027. I am repeating what my right hon. Friend said earlier, but it needs emphasising, because people are experiencing pay cuts—two decades of lost pay. It is those pay decisions that are driving industrial action, which is a last resort for workers. That is delivering instability and economic destruction.

The statement announced a range of new tax increases, but the impact again falls disproportionately on those least able to bear it. The TUC said that the hit from the 20% income tax threshold will earn the Treasury £6 billion a year compared with less than £1 billion from lowering the threshold for paying the top rate. As with austerity, that punishes those on low and middle incomes to fill a self-imposed and questionable “fiscal black hole.”

However, there is an alternative. Member after Member on the Government Benches have said that the Labour Members are not offering other solutions, but there are plenty of other solutions. We need the wealthiest individuals and biggest corporations to pay their fair share. The Budget introduced only meagre measures to levy funds from sources of wealth, and vast untaxed wealth is still being accumulated. There are numerous measures we could pursue, including abolishing non-dom status, equalising capital gains tax with income tax rates, and introducing a financial transactions tax, a one-off tax or even a new wealth tax. Hundreds of billions of pounds could and should be raised by taxing wealth and the rich in this country, and we should end the tax giveaway for the oil and gas giants’ fossil-fuel exploration.

Those measures would redistribute some of the wealth of the few to secure a better future for the many, while boosting growth. Putting more money in people’s pockets will increase spending in the local economy and boost growth, and that is why I will continue to back our trade unions. Investing in public services will ensure that people’s needs are met, and that is why I back our local authorities and the demands for better settlements for public services.

The autumn statement does not deal with the household cost of living crisis, the public service funding crisis or the climate crisis. It sets the wrong priorities, and all in the name of stability. Until a Budget robustly redistributes the money from the few to the many and gets the economy moving, the same problems and the instability we face will continue and worsen.

To conclude, I and many on the Labour Benches will continue to support the trade union-led campaigns to lift incomes, and I will stand shoulder to shoulder with them, with local councils and with communities for higher pay for everyone in our society and fairer taxation of the rich and powerful. Diolch yn fawr.

[Mr Deputy Speaker (Mr Nigel Evans)]

We come now to the wind-ups. I call the shadow Minister.

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[Victoria Atkins]

I have been nudged by the Whips, so would the hon. Lady allow me to write to her? I know how complicated it is in Northern Ireland.

I could talk about growth. Interestingly, Conservative Members were talking about growth and about how we can ensure the future of our economy for our children and grandchildren. I am extremely grateful to my right hon. Friends the Members for Aldridge-Brownhills (Wendy Morton), for North West Hampshire (Kit Malthouse), for Epsom and Ewell (Chris Grayling), and for North Somerset (Dr Fox), and to my hon. Friends the Members for Bolsover (Mark Fletcher), for Newcastle-under-Lyme (Aaron Bell), for Stoke-on-Trent North (Jonathan Gullis), and for Stoke-on-Trent South (Jack Brereton). They all emphasised how vital growth is if we are to get through these difficult issues and build a good and rich economy for us all.

We announced in the autumn statement some interesting and important measures, including safeguarding capital investment over the next five years, so that we have the largest investment in public works for more than four decades. Of course, innovation and education will be critical, which is why, next year and the year after, we will invest an extra £2.3 billion a year in schools.

On health, because we know how important it is to each and every one of our constituents, despite the very difficult times that we are in, we are providing £6.6 billion to the NHS over the next two years. We will be providing an estimated 200,000 more social care packages for the elderly and most vulnerable in our society, because we are increasing funding in these very difficult times.

We have had to take tough decisions now to lay the foundations for our economy for the next generation. We will not pass on our debts to our children and grandchildren, but we will provide education, skills and prosperity in the industries of the future. We are facing tough times, but we will rise again with a thriving economy, high employment and a bright, responsible economic future for us all. I commend the statement, but it also commends itself to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

The amazing influence of the Whips—sometimes.

Question put and agreed to.

Resolved,

That—

(a) provision may be made increasing the rate at which energy (oil and gas) profits levy is charged to 35%,

(b) provision may be made reducing the percentage in section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022 (amount of additional investment expenditure) to 29%, and

(c) (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made for and in connection with extending the period for which the levy has effect until 31 March 2028.

The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).

2. Amount of corporation tax relief for expenditure on research and development

Resolved,

That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made—

(a) increasing the percentage in section 104M(3) of the Corporation Tax Act 2009 to 20%, Friday 18 November 2022 OP No.73: Part 2 A. Calendar of Business 11

(b) reducing the percentage in section 1044(8) of that Act to 86%,

(c) reducing the percentages in sections 1045(7) and 1055(2)(b) of that Act to 186%, and

(d) reducing the percentage in section 1058(1)(a) of that Act to 10%.