Energy Security Bill - New clause 3 - Review of impact of earlier start date of the levy

The amendment seeks to assess the financial impact of an earlier introduction of the Energy Profits Levy. It aims to provide data on how much additional revenue could have been generated if the levy was implemented from 9 January 2022, offering insights into tax revenues and company profits.

She explains that clause 1 gives the Government the ability to collect the energy profits levy, setting out its scope and rate. It also sets adjustments for ringfenced profits for calculating taxable profits for the levy, excluding certain costs like decommissioning expenditure or losses incurred from previous years. She highlights that the repayment of petroleum levy revenue tax arising from decommissioning is left out of accounts but remains taxed under other taxes. The new 80% investment allowance encourages investment in oil-related activities and decarbonisation efforts such as electrification.

[INTERVENTION] He asks if the right hon. and learned Lady agrees that it should be in the Bill to cover electrification, rather than relying on a letter sent to MPs.

Murray supports applying the windfall tax from January rather than May to capture more revenue. He argues that this additional revenue could fund a VAT cut on domestic energy bills, which would help families with living costs and reduce inflation. He also criticises the Government's proposed tax break for oil producers, suggesting it does not align with climate goals.

Mr Mackinlay opposes the Energy Profits Levy, arguing it is excessive and discourages investment in oil and gas exploration. He cites previous high tax rates on North Sea profits and concerns about potential exodus of companies to lower-tax jurisdictions. He raises issues with pension impacts and environmental standards.

Intervened on a previous point, questioning whether the proposed 65% tax is below the global average and highlighting that oil companies operate in countries with higher taxes such as Angola. She also pointed out that gas sold internationally may not necessarily be used within the UK despite its environmental standards.

Stressed the importance of certainty and guidance on the electrification of North sea assets, urging for it to be included in the Bill. He criticised the lack of incentives for renewable energy sector and questioned the Government's definition of 'normal oil and gas prices.'

Proposed a higher windfall tax rate to ensure that nearly all excess profits go towards supporting families instead of boosting company profits. Emphasised the need for immediate action against a major loophole in the current proposal which provides significant tax relief on new investments.

Ms Caroline Lucas supports new clauses 8-10. She argues for a permanent taxation level on oil and gas companies to generate additional revenue for the Exchequer, which could be used to invest in energy efficiency programmes. She highlights that Norway's tax rate is significantly higher at 78%, providing context for the proposed amendment. Caroline Lucas emphasises the need to address fuel poverty by investing in home insulation and criticises the investment allowance clause as a subsidy costing £1.9 billion annually, benefiting oil companies without returning profit until after 2025.

Mr Geraint Davies intervened to support Ms Caroline Lucas's argument. He mentioned a €9 public transport pass in Germany as an example of shifting people towards sustainable transport and reducing energy costs, suggesting that higher taxes could encourage such green investments. Additionally, he highlighted research at Swansea University on using off-peak wind farm energy to produce hydrogen for gas pipes, aiming to reduce carbon footprints.

Mr Chris Matheson urged Ms Caroline Lucas to follow the money trail related to tax credits given to oil and gas companies. He suggested that these funds are passed on to major hedge fund investment billionaires who control the Conservative party in the City, underscoring the broader financial implications of such subsidies.

The Minister of State for Energy Security opposed several amendments and new clauses, arguing that assessments on fiscal impacts of measures not being introduced are unnecessary. She also clarified how the investment allowance works within the levy and emphasised its temporary nature.