North Sea Oil and Gas Producers: Investment Allowances

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The shadow questions the policy's coherence, highlighting a potential £1.5 billion tax giveaway to oil and gas producers through new investment incentives. She asks for details on costs of these breaks, confirmation of support disparities between homeowners and low-income families, and queries about alignment with net zero targets.

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This MP commends the Chancellor’s package for immediate family pressures and its focus on future investment, asking if the Government agrees that we should look towards future UK energy security needs.

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This MP questions why only energy producers face a windfall tax and expresses concerns about investment incentives potentially encouraging continued carbon-based fuel exploitation rather than decarbonisation. He asks for specifics on the £5 billion revenue and how to ensure that tax reliefs have their intended impact.

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This MP seeks assurance that the levy will not harm ongoing investment in the North sea, which is vital for job creation in emerging low-carbon industries.

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The additional tax breaks given to oil and gas firms mean that the Government are handing billions over to the very companies that are driving up people’s bills and fuelling climate change. That is money that could have been used to insulate 2 million homes, saving each household £340 every year. Are these tax breaks for more fossil fuel producers not the very opposite of what is needed to protect the planet, end our reliance on expensive gas and, crucially, invest in insulation that could get bills down?

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Just six short months ago, the UK hosted COP26, and it remains its president—not that we would know that from this appalling policy from this Government. The Glasgow climate pact, which the UK signed, commits to the “phase-out of inefficient fossil fuel subsidies”, so can the Financial Secretary explain on what grounds handing an 80% tax break to the dirty, dangerous and outdated energy of the past could possibly be considered efficient, especially when new fossil fuel production will do nothing to help with energy security or affordability? It will simply be sold at global prices on international markets. How is that climate leadership?

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I welcome the fact that the Government have adopted Labour’s policy and introduced a windfall tax on these profits. They have had to be dragged kicking and screaming—[Interruption.] I am sorry; should I give way to the Minister for Energy, Clean Growth and Climate Change?

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Clearly any additional tax cuts for the oil and gas sector should have been targeted at renewable energy generation rather than further drilling for fossil fuels. The Minister will know that the Government intend to introduce a climate compatibility checkpoint to ensure that all future decisions are in line with our climate change commitments. Can she confirm that if there is an overlap with the ongoing tax break for investment in fossil fuel drilling, it will be checked against the compatibility checkpoint?

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The Institute for Fiscal Studies—which, I am sure, understands the policy—has been critical of it, saying that the windfall tax is too generous and that “It is hard to see why the government should provide such huge tax subsidies and thereby incentivise even economically unviable projects.” Why are the Government providing incentives for projects of that sort rather than raising the money that would help out desperate families, and help them to feed their children?

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This policy confirms that we are seeing more take, take, take from Scotland’s North sea oil and gas. The Government are taking resources and taking money. Norway has the biggest sovereign wealth fund in the world, but Westminster squandered all the income from oil and gas from the North sea. At the very least, will the Government reverse their decision and support the Scottish carbon capture and storage cluster and make it a track 1 cluster, and will they consider matching the Scottish Government’s £500 million just transition fund?

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It has been reported that this concession will deliver an additional subsidy of £200 million to Shell for its development of the Jackdaw field, which was going to go ahead anyway. How can that be justified?

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Jeremy Cresswell, the emeritus editor of Energy Voice in the north-east of Scotland, highlighted his concerns that the investment allowances put in place by the UK Government as part of the windfall tax are directly for big oil, as opposed to for big renewables too. Can the Minister clarify an earlier point made in response to my hon. Friend the Member for Glenrothes (Peter Grant)? She said that electrification could be part of the programme: surely it must be part of it.