Offshore Petroleum Licensing Bill

Richard Drax Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Edward Miliband]

I do not believe that it fulfils the kind of climate leadership that we pride ourselves on in this country. Here is another interesting fact for the House. UK Export Finance, I think with the guidance of the right hon. Member for Reading West, decided at COP26 that we would not finance oil and gas projects abroad. Now, there must be a reason why UKEF decided that. Presumably, the reason is that we want to make the transition away from fossil fuels. At the same time as UKEF decided not to do that, we will look like hypocrites if we do this by saying, “We’re just going to carry on maxing out at home.”

I know there are a lot of other people who want to speak, Mr Deputy Speaker. We have a Bill—

[Richard Drax (South Dorset) (Con)]

rose—

[Edward Miliband]

Oh go on. That is very tempting, so I will give way to the hon. Gentleman.

[Richard Drax]

I am grateful to the right hon. Gentleman for giving way. He has spoken for an awfully long time and I suspect he is coming to the end of his speech so that Back Benchers can participate. Not one idea has he put on the Floor of the House about what Labour would do were it to take over from us.

[Edward Miliband]

I will tell the hon. Gentleman exactly what we would do. I am really grateful to him for intervening, but I am sorry he has lengthened my speech. We would establish a national wealth fund to invest in British jobs to give a future in steel and automotive, and to invest in our ports. We would set up GB Energy to generate wealth for our citizens. If it is good enough for countries abroad, why is it not good enough for us? We would insulate homes across the country. We would finally lift the disgraceful onshore wind ban that is adding £180 to every family’s bills. That is just the start. I do not want to detain the House for too long, but there is plenty more where that came from.

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

The irony is not lost on me in this debate that every single one of us in this place wants the same thing. Normally when the whole House agrees on something, I think that something is wrong, but in this case I have no doubt that the whole House is right: we need to reduce our reliance on fossil fuels. What we are debating today and arguing about in this place is how we can get there in the most pragmatic way. This Bill is another example of the Government trying their best to do what is right at this moment in time, but I fear that the punitive taxes—I will ask the Minister more about those in a minute—will not help the investment that the Government say is so needed.

To rely more on our own gas and oil from the North sea is a necessity and full of common sense. It is a fact that we will be relying on fossil fuels for decades to come—a point that no one in this place denies. The UK has made some impressive advances in wind and solar, and a new generation of nuclear is on its way, although I have to say that we and the Opposition have been talking about nuclear investment for years, yet so little has been done. Wind and solar are excellent ways of generating power. I have not yet heard anyone here today say that when the wind does not blow and the sun does not shine—[Interruption.] I will come to tidal in a minute, if I may. The hon. Member for Brighton, Pavilion (Caroline Lucas) has just joined the debate, I think, but I will answer her point; Portland in my constituency has a huge tidal race. But it is a fact that when the sun does not shine and the wind does not blow, we do not get the energy we need. Also, as we have heard many times, we have cut our emissions by half; we are a world leader and have a record to be very proud of. Just touching on what the hon. Lady said about tidal, yes of course we have huge tidal races in this country, including in Scotland and in Portland off the coast of South Dorset in my constituency. If we can explore this and harness it to make it work—there are major technical issues, not least with sand and with salt water, which is very destructive—then she is absolutely right, it is a way of generating energy that I am sure everyone would support.

I have heard from several speakers today about the instability of the world we live in. That is very true and I do not have to rehearse why I feel that in my lifetime we are facing the most dangerous times on our planet. If we do not have the power to drive our economy and our homes, it would be strategically—quite apart from anything else—insane. We are an island nation, and I do not have to remind anyone in this House how significant energy independence is going to be in the event of a catastrophe. Here we have a Bill that will allow companies to apply for licences to safeguard domestic energy supplies. The Bill says that this will safeguard more than 200,000 jobs, enhance our security, reduce dependence on higher-emission imports from overseas and significantly prevent families and businesses from being unduly burdened, which to a certain degree they already are through the green taxes that everyone faces. So what’s not to like, you may ask—

[Mark Garnier (Wyre Forest) (Con)]

I am very convinced by the arguments that my hon. Friend is putting forward, but he has missed one useful point. Does he not agree that the generation of oil and gas in the North sea will generate tax receipts that can then be used to subsidise green energy production in other parts of the British economy?

[Richard Drax]

That point has been raised several times, and I totally agree that the tax receipts from investment in oil and gas play a huge part in our economy.

I might have this wrong, but as I understand it these companies will face 50% corporation tax and a 35% windfall levy. I would be grateful if, in his summing up, the Minister could say whether that is true. I am not an expert in the industry, but I think that chief executives, board members and shareholders would wince if, having been told that they have to do all this, they have to pay all that punitive taxation. They might say, “Why on earth should we do this in the first place?”

[David Duguid]

Not to step on the Minister’s toes, but my understanding is that even before the 35% energy profits levy, the oil and gas sector was, at 40%, already the most taxed sector in the country—40% plus 35% is 75%. I stand to be corrected by the Minister if I am wrong.

[Richard Drax]

I hope my hon. Friend and I can be corrected by the Minister because, as the House has just heard, the tax rates are punitive. If we are going to do this for all the common-sense reasons that the Minister and the Government say we should, why on earth are we raising taxes to such a point that it discourages and disincentivises all those who need to spend hundreds of millions of pounds, or more, to get the oil and gas out of the ground?

The powerful Climate Change Committee, which operates outside this place, is mentioned occasionally but, frankly, it is pretty unaccountable. It is very influential, and it has now set our fourth carbon budget, which can be legally challenged once it is in place. I wonder whether the Government fear that they could find themselves in the courts as they rightfully plough on with this Bill, to which many people object.

It shocks me to the core that it has taken a war in Europe for the west to prioritise both energy and food security. For how many decades have we been talking about nuclear power, and what has happened? Very little. Nuclear will be a vital component of keeping the lights on and keeping this country safe. Globalisation has softened our resolve to stand alone, if need be, when hard times hit, in whatever shape they come. The Bill has a lot going for it, not least a most welcome return to our old and absent friend: common sense.

I urge the Government to find pragmatic solutions to the transition to net zero and allow the private sector to do what it does best, which is provide jobs and prosperity, not least in Scotland. The search for alternatives to fossil fuels will continue and, as we have heard, the tax receipts will be used to invest in green energy. I have no doubt at all that an affordable, reliable and plentiful solution will be found—the human race has a remarkable ability to survive—but, in the meantime, will the Government continue to work in the real world to keep the lights on, the economy running and the country strategically safe?