North Sea Oil and Gas Producers: Investment Allowances

Peter Grant Excerpts

Monday 6th June 2022 Commons Chamber

[Mr Speaker]

I call the Scottish National party spokesperson, Peter Grant.

[Peter Grant (Glenrothes) (SNP)]

I welcome the acknowledgement from the Government yet again of the vast wealth that currently lies under the waters of Scotland. Oddly enough, in 2014, it had run out, but there still seems to be an awful lot of wealth to be got from the North sea just now.

Will the Minister explain why the windfall tax was only ever applied to the energy producers? Why was it not applied to other companies that, just through good luck, became mega-rich almost overnight? I am talking about the big multinational tech firms, online retailers and the importers of shoddy, useless personal protective equipment that cost the public billions of pounds. Why are they not facing a windfall tax, at the very least?

If an investment allowance is appropriate, why is it not being restricted to investments in technologies that will reduce the carbon footprint of the North sea? Why is it not being restricted to helping to transform Scotland’s and the UK’s oil production away from carbon-based fuels to other methods? Why is it being used effectively to give an incentive to continue the exploitation of our carbon resources?

The Minister said that the Government expect to get £5 billion from the windfall tax. What would the amount have been if they had not applied the investment allowance? How much are the oil companies saving as a result? The National Audit Office and the Public Accounts Committee have expressed concerns about the lack of reliable detail to show that tax reliefs have had the result intended. How will the Government know that they have? What steps will they take to prevent fraudulent claims?

[Lucy Frazer]

The hon. Gentleman makes a large number of points. The reason we are taxing this sector is that these are extraordinary profits that have been made not as a result of anything that the companies have done, but because of the price of gas. The Chancellor also said that he would look at electricity generation, because that is riding on the back of gas prices.

On the hon. Gentleman’s point about decarbonisation and the oil and gas sector, I point out that capital allowances will be available for capital expenditure from the oil and gas sector that makes the production of oil and gas less carbon-intensive, which could include electrification.