Energy (Oil and Gas) Profits Levy Bill

Debate between Richard Burgon and Stephen Flynn

Committee stage
Monday 11th July 2022 Commons Chamber

[Stephen Flynn]

I will not give way to the hon. Gentleman. That has nothing to do with this Committee stage, and I would hate to get diverted, as some others did earlier.

What we and the industry need to be clear about is what price the Government regard as normal. If we are to have serious legislation, we need serious answers to the most basic of questions.

[Richard Burgon (Leeds East) (Lab)]

I wish to speak in favour of my new clause 1, new clauses 8 to 10, which I have signed, and of course the amendments from the Labour Front Benchers.

Away from the drama among Government Members over who will be their next leader, the cost of living emergency out there is biting ever harder. Experts now warn that the energy price cap will surge by another 64% in October to more than £3,200 a year—up £2,000 in just a few months. Millions of people will be thrown even further into crisis. We urgently need further Government interventions to help them, and my new clause offers a way to do that.

In May, after political pressure from the Labour Benches, the Government were forced into imposing a windfall tax on the North sea oil and gas producers’ excess profits. Such a tax is certainly needed. The Government’s own figures suggest that North sea oil and gas companies will make pre-tax profits of £21.4 billion this year—a staggering increase from the £2.5 billion average over the past five years. We have gone from a £2.5 billion average to £21.4 billion this year.

Let us be clear: these excess profits are not the result of extra investment. They are not the result of innovation. They are an undeserved and unexpected windfall, mainly resulting from Russia’s horrific war on Ukraine. They are vast super-profits made on the backs of higher bills for ordinary people. We have a clear choice. Either we allow the oil and gas giants to hoard those excess profits, or we use the funds to help to bail out the vast majority of people hit hard by soaring energy bills.

My new clause 1 calls on the Government to look at setting the windfall tax at 45% on top of normal tax rates, not the current proposed 25%. The aim is to ensure that nearly all of the windfall—the undeserved, unmerited excess profit—goes to supporting families instead of boosting the profits of oil and gas giants.

The windfall tax as it stands will raise £5 billion. The higher windfall tax that my new clause addresses would raise another £4 billion in tax revenues this year alone, which could provide an extra £1,000 payment to the most vulnerable 4 million households. Surely that is more important than boosting oil and gas company profits. North sea oil and gas companies’ revenues have risen so much that even with this higher tax they would still make £3 billion in profits this year, which is above their recent average.