Offshore Petroleum Licensing Bill

Debate between Richard Drax and David Duguid

2nd reading
Monday 22nd January 2024 Commons Chamber

[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?