PARLIAMENTARY DEBATE
Energy (Oil and Gas) Profits Levy Bill - 11 July 2022 (Commons/Commons Chamber)

I beg to move, That the Bill be now read a Second time.

People across the country are facing rising energy costs and an increase in the overall cost of living. Of the basket of goods and services that we use to measure inflation, a record proportion are seeing above average price increases. Indeed, the country is now experiencing the highest rate of inflation for 40 years, which is causing acute distress to the people of this country. In May the Government announced a series of measures to help the British people during this difficult time, in which we have seen oil and gas prices reach new highs; oil prices have nearly doubled since early last year and gas prices have more than doubled. This is a global phenomenon that is driven by factors out of any single Government’s control, in large part resulting from Russia’s illegal war.

With increased prices at the global level, profits from oil and gas extraction in the United Kingdom have also shot up. These are unexpected, extraordinary profits—above and beyond what forecasters could have expected the sector to earn. Because of these extraordinary profits, and to help fund more cost of living support for UK families, the Government are introducing an energy profits levy. The temporary levy is a new 25% surcharge on the extraordinary profits. When oil and gas prices return to historically more normal levels, it will be phased out.

I would welcome some clarity from the Minister as to what his Government regard normal prices to be, because those involved in the industry will be watching on at this moment.

The answer is: prices of an order that we saw prior to Russia’s invasion of Ukraine and prior to some of the inflationary pressures resulting from the covid disruption—prices more akin to those seen in 2021. Indeed, we could also refer to factors that predate that, back to 2019. The system has clearly been in flux, but I would certainly not want to encourage the artificially low prices of 2020 to be seen as a baseline for these purposes.

I thank the Minister for giving way again. Getting investment into the industry is one of the Government’s big arguments for the tax break incentives they are providing to the industry. How can that possibly happen when they do not even say what a normal price is?

I will set out more about our investment incentives in a moment. We are not going to tie ourselves to a specific price level, but will obviously look towards a return to more normative market conditions—not, as I said, the artificial lows of 2020—such as the pre-crisis situation in 2019 and some of the much healthier pattern of last year, prior to what Russia has done in Ukraine, which has obviously driven prices to new highs. That gives the House a sense, but we will obviously set out our thinking well in advance of repealing the levy.

I am firmly committed to our net zero strategy.

Will the Minister give way once more?

No, I will not; I am going to make some progress.

As set out in the energy security strategy, the North sea will still be a foundation of our energy security for years to come. Currently, about half our demand for gas is met through domestic supplies. In meeting net zero by 2050, we have to be realistic; we will still be using about a quarter of the gas that we use now. It is therefore necessary to incentivise investment in oil and gas, and to encourage companies to reinvest their profits to support the economy, jobs, and our energy and security, but it is possible to tax extraordinary profits fairly and to incentivise investment. That is why, within the energy profits levy, a new “super-deduction” style relief has been introduced to encourage firms to invest in oil and gas extraction in the UK. We expect that the energy profits levy, with its investment allowance, will lead to an overall increase in investment. Indeed, one oil and gas company has already said that the immediate investment allowance should spark further investment in the North sea. The new 80% investment allowance will mean that, overall, businesses will get a 91p tax saving for every £1 they invest, providing them with a clear incentive to do so. This nearly doubles the tax relief available and means that the more investment a firm makes, the less tax it will pay. Unlike Labour’s windfall tax in 1997, this levy both incentivises investment and raises more revenue.

The energy profits levy contains an investment allowance that doubles the overall investment relief for oil and gas companies, unlike Labour’s proposal of a few weeks ago. Our levy raises around £5 billion over the next 12 months against Labour’s estimate of around £2 billion for its proposals. Its windfall tax would raise less than £70 per household, not £600 as it claimed. In fact, the Opposition’s regressive VAT plans would give millionaires in mansions more off their bills than those in need. They are now caveating their windfall tax costings by stating that their £600 per household support will be supported by “other measures”. By that I presume they mean more public spending and a higher rate of taxation for hard-working people across this country. As usual with Labour, the sums sadly do not add up.

The new tax we are introducing today ensures that the extraordinary and unexpected profits from which oil and gas companies have benefited are taxed fairly and provide a significant investment incentive. This is a sensible considered move and one that will be warmly welcomed across the House.

Our plans mean that the oil and gas producers can claim the allowance when their spending on investment is actually incurred. This is unlike the allowance under the existing permanent tax regime for oil and gas companies, which can be claimed only once income is received from the field, subject to the investment, and, as some Members of the House will know, that can take several years.

I want to make it clear what the investment allowance will apply to. First, if capital or operating expenditure qualifies for supplementary charge allowance, it will qualify for the energy profits levy allowance. As the levy is targeted at the extraordinary profits from oil and gas upstream activities—that is the profits that came about owing to global price increases—it makes sense that any relief for investment must also be related to oil and gas upstream activities.

Secondly, such spending can be used to decarbonise the oil and gas production, for example through electrification. Therefore, any capital expenditure on electrification, as long as it relates to specific oil-related activities within the ringfence, will qualify for the allowance.

I thank the Minister for giving way once again; he is being very generous. On that specific point, the Financial Secretary to the Treasury stated the same last week. It is good to have that clarification, but why is it not written into the text of the Bill?

I can provide that assurance from the Dispatch Box. Examples of electrical expenditure on plant and machinery will be things such as generators, which include wind turbines, transformers and wiring. I also remind the House that there are other tax and non-tax levers to support non-oil and gas investments, such as in renewables. Those levers include the super-deduction and our competitive research and development tax credit regime. Importantly, the returns on these investments are taxed at 19% rather than at 65% as for UK oil and gas profits.

We have been listening closely to feedback from industry. Late last month, my right hon. Friend the former Chancellor met industry stakeholders in Aberdeen to discuss the levy and to make sure that it works as the Government intend it to. As my right hon. Friend the Financial Secretary to the Treasury confirmed in a debate last week, the Government have changed the legislation, which is reflected in the Bill before us today.

Tax repayments that oil and gas companies receive for petroleum revenue tax related to losses generated by decommissioning expenditure will not be taxed under the levy. These are repayments that are typically taxed under the permanent tax regime. However, as wider decommissioning expenditure is also left out of the account for the levy, this change is both consistent and fair. I wish to reiterate my thanks to those in the industry with whom we have engaged on this matter, and to again reassure the House that, with this change, the Government still expect the levy to raise around £5 billion over the next year.

On how long the levy will be in place, it will take effect from 26 May this year and, when oil and gas prices return to historically more normal levels, it will be phased out. The sunset clause in the Bill ensures that the levy is not here to stay. There are very few taxes that have their expiry date set in law, so this provision demonstrates the Government’s commitment to keeping the levy temporary and gives oil and gas companies further reassurance as they seek to plan their investments.

Our permanent oil and gas tax regime is competitive globally against similar operating environments and is lower than that of Norway, the Netherlands or Denmark. However, it is both fiscally prudent and morally right that we have a temporary and targeted levy that applies to extraordinary profits in our oil and gas sector and reflects an extraordinary global context.

Through the Bill, the levy will raise some £5 billion of revenue over the next year so that we can help families with the cost of living through significant and targeted support to millions of the most vulnerable. These are extraordinary times and we are seeing extraordinary prices, and that requires extraordinary Government action.

I did not come in to politics to raise taxes, nor did this Government, but we are about delivering the action required to support families in their time of need. At the same time, the Government are clear that we want to see the oil and gas sector reinvest its profits to support our economy, jobs and energy security. For those reasons, I commend the Bill to the House.

The hon. Gentleman is making the point that Labour has campaigned on this for seven months. At the same time, the SNP has been calling for a much wider profits levy to address excess profits of other companies. Why is Labour not looking at that? I will give an example: Tesco chair John Allan, as we know, called for the windfall tax on oil and gas, but Tesco trebled its profits from £636 million to more than £2 billion. Why not an excess profit levy on Tesco and others that have profited through the pandemic?

This demonstrates the difference between Opposition Members and Conservative Members, in that we do not come lightly to the decision to increase taxes on successful British industries. Labour and the SNP would tax anything that moved; we take a long time to think through our plans carefully. That is why we are presenting this plan today, which is far removed from Labour’s plan. That would decapitate the oil and gas industry—which, by the way, Labour does not support—and we would have the taps turned off tomorrow.

It is good that the hon. Gentleman mentioned Tax Justice UK. It is probably worth speaking to it about pandemic profits and a wider profits levy, because that it is what it advocated. Hopefully when he is discussing the oil and gas stuff with it, he will discuss a wider profit levy as well.

Although the hon. Gentleman is talking about how the Labour party likes to support working people, he is quite obviously abandoning all those working people who rely on the oil and gas industry for their employment, including the many thousands who live in my constituency. Given that he has had so many months to think about this, how many times have he and his shadow Cabinet colleagues actually met those in the oil industry to discuss this and see how it impacts on them?

This Bill is of particular interest to me, as not only is the cost of living crisis hitting hard in the Waveney constituency, but we need jobs based on the North sea to revitalise the local economy. I should also point out that I chair the British offshore oil and gas industry all-party parliamentary group, as the industry is a significant employer in the Lowestoft and Great Yarmouth area.

It is necessary to balance the need for short-term measures to support people through an unprecedented challenge, caused by covid and exacerbated by Russia’s brutal invasion of Ukraine, against our long-term priority of promoting investment in the UK continental shelf, which will not only revitalise coastal communities but help us achieve our net zero obligations. It is important to point out that the activities taking place on the UK continental shelf are not just the extraction of oil and gas, but those in emerging new lower carbon industries such as offshore wind, hydrogen production and carbon capture, utilisation and storage, all of which are inextricably linked. Any levy on the oil and gas sector, if poorly thought through and poorly drafted, could have a negative impact on investment in those emerging industries, which are so vital to our future.

There is concern that there is a lack of a coherent long-term energy strategy. This Bill, printed on 5 July, in many respects conflicts with the Energy Bill published the very next day. The latter Bill aims to boost the UK’s energy independence and security, attract private investment, reindustrialise the economy and create jobs through clean technologies. What is required is a seamless thread that runs through all aspects of energy policy, from our long-term strategy for producing energy to the need for a major step change in how we insulate our homes and our businesses, right through to the support for those who need it most at the current time. Those latter initiatives should build on policies already in place, such as the energy price cap, the warm home discount and the energy company obligation. We should also look to add to them with support such as the social tariff.

Underpinning this integrated approach should be how we ensure that we fully realise the great opportunity to create exciting, new jobs and how we can best provide people with the necessary skills. In mapping out the strategy with particular regard to this levy, the Government should have in mind the following considerations. The first is the vital importance of not inhibiting investment in decarbonised projects that will create jobs and help us meet our net zero obligations.

Secondly, the Government must have it in mind that investment in energy projects is global and footloose and, if we have an unstable fiscal regime, business will go elsewhere. Thirdly, they must ensure, and not undermine, the security of our energy supply. Fourthly, they should have regard to the negative impact on not just those high-profile oil and gas majors, but the supply chain companies located in many constituencies that are invariably highly innovative small and medium-sized enterprises and are the lifeblood of our local economies. Fifthly, notwithstanding that the Bill contains a sunset clause, there remains some uncertainty on the levy’s timeframe, which I hope the Minister will clarify.

Taking those considerations into account, the amendments and clarification that the Government have made are welcome. They include the exclusion of petroleum revenue tax rebates from the levy, reassurance that capital expenditure on electrification linked to oil and gas is included in the investment allowance, and the inclusion of the aforementioned sunset clause.

That said, more changes would be welcome to reduce the fiscal uncertainty, so I would be grateful if the Government considered the following suggestions. To support SMEs, they should introduce a small profit allowance to allow companies with small profits to be exempt from the levy. That would assist small companies that have been investing for many years. They accumulated significant losses when oil and gas prices were low and are now making only marginal profits.

There should also be support for decarbonisation schemes to ensure that projects such as the electrification of oil and gas production facilities benefit from the capital allowance. A regular review mechanism should be included to ensure that the levy is delivering on its aims and is not having any unintended consequences. There is also a need for regular ongoing dialogue with the industry and the sector’s investors.

I understand why the Bill is being introduced—we are in unprecedented and deeply troubling times—but I am mindful that unintended consequences could undermine much-needed inward investment into the UK, particularly along the North sea coast, which is vital to the regeneration of towns such as Lowestoft. I therefore urge the Government to do all they can to address those concerns, and I hope that the Minister will do that in her summing up.

It would be remiss of me as MP for Aberdeen South not to reflect on the fact that last week marked 34 years since the Piper Alpha disaster. It is all well and good for Members to talk about the Bill, but it is important to reflect on the sacrifices that many people have made in the North sea, particularly my constituents and those of the hon. Members for Banff and Buchan (David Duguid) and for West Aberdeenshire and Kincardine (Andrew Bowie), who continue to work in inhospitable terrain daily. I also reflect on the ultimate sacrifice that was paid by so many people long ago; I am sure the Minister will join me in that in her summing up.

On a less serious note, it is funny that we are in the midst of a leadership contest where all we hear about is tax cuts—some have promised £200 billion of tax cuts—yet the Chief Secretary to the Treasury is in the unenviable position of coming to the Chamber to tell us that he will hike taxes to 65% on the oil and gas sector. The irony of that will not be lost on anyone present. Importantly, that tax hike is four times greater than the £1.2 billion that the Opposition pushed for in January, so I congratulate him on being the only Conservative at this moment who appears to want to hike taxes.

Seriousness is important in this debate, however, because we are talking about why the legislation is needed. All hon. Members present are aware of the severe challenges that people up and down the country are facing. Energy prices are absolutely skyrocketing and we have all seen the troubling news in the last couple of days that they are expected to go higher than even Ofgem anticipated. There is also the knock-on impact of inflation, which is away to hit double figures. Fuel costs are skyrocketing. Clothing costs are skyrocketing. Food costs are skyrocketing. Interest rates are going up. Whichever way people turn, irrespective of where they live on these isles, they are getting squeezed and hammered. And the situation is not going to get better: we know the UK under the leadership of the current United Kingdom Government has the slowest growth in the entire G20 outside of Russia and the true effects of Brexit continue to be felt.

So implementing a policy that puts money into people’s pockets is necessary and we of course support the principles of what the Government are seeking to do in that regard. It is worth reflecting on the fact that we are now at a point where the UK Treasury has coined some £400 billion from Scotland’s North sea oil and gas sector. Is it not a pity that we are returning to the well once again? We look enviously across the North sea at Norway, which has a sovereign wealth fund from its own oil and gas sector. It is a bigger basin there, but that fund sits at around $1 trillion. What a comparison to this Government. Not only are they going back to the Scottish well to try to put in place financial support for people, but they are at this crux, where they do not necessarily know what it is and where they are seeking to go, because the Bill was undoubtedly hastily written on the back of Sue Gray’s report, as the Minister acknowledged earlier, when he could not even tell us at what price the levy would be removed. He talks about a normal price for oil and gas. I do not know what a normal price is for oil and gas; I am the MP for Aberdeen South and I have no idea what a normal price for an oil and gas barrel should be, and I do not think any Members on the Government Benches do. That offers absolutely no certainty to industry, irrespective of what the Government seek to suggest.

Perhaps the most glaring omission from the Bill is the fact that the Government are going to offer tax incentives in relation to further exploration, but we will not have anything in the Bill on renewable technologies directly linked to the offshore industry. Those tax incentives are not going to be applied to the renewables industry itself. We were told that is outwith the scope of the Bill, but it is a great disappointment that the Government had an opportunity to seriously incentivise investment in renewables and chose not to do so.

We are of course talking about the wider picture at the present time and I reflected earlier on the UK Government’s desire to cut taxes, but we have not heard about climate change from any single Tory leadership candidate; what are their views on climate change? It is disappointing that there is no talk in relation to this Bill about the journey to net zero or the climate compatibility checks that I think we all across this Chamber, and indeed in industry, agree with.

It is clear, from looking at the situation at the moment, why the Bill is needed. The Government chose to introduce it when they did for reasons of political expediency, but we cannot allow the Bill to simply go through without attempting to improve it and I look forward to doing that at Committee stage.

Order. I ask Members to respect the maiden speech conventions as I call and welcome Simon Lightwood.

Thank you, Mr Deputy Speaker. It is with great pleasure that I rise to make my maiden speech today. The people of Wakefield have placed their trust in me to restore their rightful voice in this place, and I hope I will reflect their affinity for no-nonsense straight talking in my contributions in this House. I will speak briefly on the Energy (Oil and Gas) Profits Levy Bill before begging Mr Deputy Speaker’s indulgence to speak about the wonderful constituency that I now proudly represent.

What took you so long? It has been seven months since the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), first set out Labour’s plans for a windfall tax on oil and gas giants—seven long months of dither and delay as Government Members attacked the common-sense, compassionate plan to help millions of people facing soaring energy bills and the choice between heating and eating. Why? Pride. The Government could not possibly embrace an idea proposed by the Labour party, so instead of focusing on the people crying out for help, they attacked and ridiculed the idea, while millions worried about how to make ends meet.

I have spent the past few months telling people that this was their chance to tell the Prime Minister he should go. I am delighted that the voters of Wakefield took my advice, but am slightly surprised that 53 Conservative Ministers did, too. We need a change in Government and a fresh start for Britain. Everywhere we look, we see things that are broken, but under this Government, nothing gets fixed. They are incapable of governing in the national interest, and should move aside and call a general election. Those, perhaps, are not the words expected of a Member still exhausted by the rigours of a by-election, but it is an important message to deliver when the Government show such a clear detachment from reality.

I was not born in Wakefield, but I was made in Wakefield. It opened my eyes to a world of opportunity, and I fell in love with the people and the place when I moved to West Bretton to study for my theatre acting degree at Bretton Hall College, which is nestled in the glorious grounds of the world-renowned Yorkshire Sculpture Park. The city also boasts the Hepworth gallery, which was designed by the British architect David Chipperfield and takes its name from the artist and sculptor Barbara Hepworth, who was born and educated in the city. Wakefield constituency includes Wakefield—the merrie city, as it is known—and a large rural area to the south-west. It also includes the towns of Horbury and Ossett, each with their proud history and unique identities.

Wakefield has a proud mining heritage, and I pay tribute to those who powered our nation and kept our lights on. At the National Coal Mining Museum, situated in Wakefield, people come from all over the country to learn about that important industry and its important place in our history. While we cherish our proud heritage, we also have our eyes set towards the future, as shown by the recent opening of CAPA College, which is inspiring, training and educating the next generation of performers, creatives, designers and technicians. I was also pleased to visit the construction site of Tileyard North a couple of weeks ago. That exciting 135,000 square feet creative industries hub, based at Rutland Mills, is transforming the site into the UK’s largest creative community outside London.

As is tradition, I would like to pay tribute to some of my predecessors, including Mary Creagh, who I watched from the Gallery delivering her maiden speech some 17 years ago. A tenacious campaigner and advocate for the people of Wakefield, she successfully introduced the Children’s Food Bill in 2005, which sought to introduce minimum nutritional standards for all school meals. She went on to hold various positions, including shadow Secretary of State for Environment, Food and Rural Affairs, and was pivotal in delivering the new Pinderfields Hospital.

I also pay tribute to David Hinchliffe, who represented Wakefield from 1987 to 2005. He was Chair of the Health Select Committee and, in 1988, became the founder and first secretary of the all-party parliamentary rugby league group—coincidentally, the first all-party parliamentary group I joined upon my election. Finally, I pay tribute to the right hon. Walter Harrison MP, who represented Wakefield from 1964 to 1983. He proudly served as a Government Whip from 1966 to 1970, and as Deputy Chief Whip from 1974 to 1979. I believe Walter remains the only half vote recorded in Hansard, having jammed his foot in the Lobby door just as it was about to close, after being delayed in a lift.

It will not have escaped the notice of Members that I have omitted my most recent predecessor, who left the people of Wakefield without a voice in Parliament, but what I would like to do is pay heartfelt tribute to all victims of sexual abuse for their bravery in pursuing justice. Their actions leave the world a safer place and send a message to those who perpetrate such heinous crimes that we, as a society, will not tolerate sexual violence and abuse. No matter what your status, you are not above the law.

The reality of sexual violence and abuse in England is truly shocking: one in four women have been raped or sexually assaulted as an adult; one in 20 men have been raped or sexually assaulted as an adult; and one in six children have been sexually abused. Those are staggering statistics and represent an uncomfortable truth that must be heard—and, more importantly, urgent action must be taken. Our justice system is failing when only one in 100 rapes are reported to police and charged that same year. Sadly, most victims and survivors of rape do not report it to the police: five in six women and four in five men do not report it.

The biggest tribute we can pay to victims is our action, our perseverance and our commitment to demanding better, to doing more and to being honest with ourselves and admitting that when victims and survivors are forced to wait three years for their case to get to court something is badly wrong. We can and must do better. So, I pay tribute to all victims and survivors of sexual violence and abuse, and promise to always be straight-talking on this issue, and to ensure that the voices of victims and survivors are always heard.

Before taking my seat, I proudly worked for the national health service and witnessed the sheer exhaustion and the struggle that those on the frontline continue to face, and the frustration of those seeking to access NHS services stretched far beyond their limits. I worked with some real-life superheroes. As we move into a world where we live side by side with covid, I urge all colleagues to remember that for the NHS, the impact will be with us for many years to come. They deserve our respect, our patience and our gratitude for all they continue to do.

The people of Wakefield are weary of our politics and their trust has been eroded, but I promise to rebuild that trust every day and be their strong voice in Parliament, fighting every day for the betterment of my constituency.

Congratulations on your maiden speech. You will remember this day forever.

I congratulate the hon. Member for Wakefield (Simon Lightwood) on an excellent speech. He told us about the wonderful heritage, arts and culture in his constituency. I went to Yorkshire Sculpture Park, a long time ago now, and it was absolutely beautiful. I encourage everybody to go. I hope he will not suffer the fate of one his predecessors and get his foot jammed in one of the Lobby doors. Maybe if he comes early for voting, he can avoid that fate.

We Liberal Democrats have been calling for a windfall tax since last year. It was my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) who first suggested, last October, a windfall tax on the super profits of the oil and gas giants that were taking millions of pounds in profit while households were starting to struggle badly. For months the Government tried to resist a windfall tax, defending the indefensible. The Government have finally caved in, but too late for many. For example, my constituent wrote to me in January saying that he had to stay in bed because he could not heat his home. Our Liberal Democrat analysis shows that more than double the amount could have been raised if the Government’s levy was tougher now and had been implemented earlier. The equivalent of £200 is lost to each household because the Government are doing too little too late.

The hon. Lady is making an absolutely excellent and pertinent point. Does she agree that the Government have had ample opportunities, but voted no fewer than three times in this House against bringing a levy in earlier?

I could not agree more. The Government have dithered and delayed. They could do something about it and back our amendment, which would ensure that the new levy on oil and gas companies is backdated to last October. That would at least reflect the dither and delay and do something about it.

What should we make of the proposals to exempt those companies investing in new oil and gas exploration? There is nothing in the Bill to incentivise investment in renewables. That flies in the face of the Government’s commitment to get to net zero. In fact, it demonstrates once more how quickly they are prepared to U-turn on their promises, making it harder for struggling households to get on top of soaring energy bills now and in future and failing to take serious action on climate change. What is more, where is the programme to transform the pace of home insulation, which is lagging shockingly behind? Where are the planning laws to ensure that we build zero-carbon homes now rather than allowing developers to build homes that will require very costly retrofitting in a few years’ time?

We need bold and swift action to help families with the soaring cost of living and energy prices. The cheapest form of energy is onshore wind. When will the Government drop their effective ban on onshore wind and turbo-charge its revival? That would be the surest way to help struggling households to bring their energy bills down in the near future. The Government, however, can only fire-fight, and they have no vision and no real ambition.

Under Liberal Democrat plans, we would cut most emissions by 2030. That would be good not only for the climate, but for people’s pockets as we wean ourselves off global oil and gas markets as soon as possible. The Government have to come clean on the fact that even if gas and oil are produced in the UK, that will do nothing for household energy costs, because the price of oil and gas is fixed globally, not nationally.

On new green jobs, cleaner air, warmer homes and lowering living costs, the levy could have done so much more. We Liberal Democrats support the Bill but deplore the lack of a much greater ambition from the Government to rein in soaring energy costs and tackle the climate emergency.

I call the shadow Minister, Abena Oppong-Asare.

It is a pleasure to respond on Second Reading on behalf of the official Opposition. I thank all hon. Members; this has been a good debate with many interesting contributions from across the Chamber. I particularly congratulate my hon. Friend the Member for Wakefield (Simon Lightwood) on his excellent maiden speech—isn’t it great to see Wakefield turn red again? I know that he will be a great champion for Wakefield and his constituents, and I look forward to hearing many more of his speeches. I also thank the hon. Members for Waveney (Peter Aldous), for Bath (Wera Hobhouse) and for Aberdeen South (Stephen Flynn), who made interesting speeches; it is good to hear them supporting Labour’s policy.

The message that we have heard loud and clear from hon. Members today is that the Tory cost of living crisis is far from over. In fact, the financial pressures that many people are facing grow larger and larger. Food, fuel and energy bills continue to rise and families across the country are already worrying about the winter that lies ahead, as we all see reflected in the emails that we get from our constituents across the country. As my hon. Friend the Member for Wakefield mentioned, in that context, we are finally considering this long-overdue Bill, seven months after my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, set out Labour’s plan for a windfall tax on oil and gas producers—I repeat: seven months.

As my hon. Friend the Member for Ealing North (James Murray) said, since Labour first called for the windfall tax on oil and gas producers, energy bills for typical households have risen by a shocking £700, inflation has rocketed to its highest level in 40 years, and, of course, people’s taxes have gone up as the Government have pressed ahead with the national insurance increase. In that period, oil and gas producers’ profits have soared. Indeed, we estimate that between Labour first calling for the windfall tax in January and the former Chancellor and soon-to-be former Prime Minister finally accepting our arguments at the end of May, nearly £2 billion of tax revenue could have been raised to help people with the cost of living crisis. In that time, Conservative MPs voted against our plans for a windfall tax not once, not twice, but three times. Ministers repeatedly claimed that such a plan would not work. Famously, the current Chancellor said that oil and gas producers were “already struggling”; I would be very interested to hear from the Chancellor whether he has changed his mind about that.

It is shameful that it took the Government so long to come to their senses and finally do the right thing. That is yet more evidence, if we needed it after last week, that this Government are on their last legs, out of touch, out of ideas and now truly out of time. With the windfall tax and with so many other issues, it is Labour that leads and the Conservative party that follows. We are relieved that the Government are finally legislating for a windfall tax, and we will not oppose the Bill today, but there are several areas of concern for us.

Several hon. Members have mentioned the Bill’s tax break for oil and gas producers. We simply do not think it right that the Bill will hand back money to the same companies that are supposed to be contributing their fair share to tackling the cost of living crisis. As my hon. Friend the Member for Ealing North said, for every £100 that an oil and gas company invests in the North sea, it will receive £91.25 from the taxpayer. How is that right? I compare that with the £25 that companies receive for investing for renewable energy, which is set to fall even further. A third or more of the revenue from the windfall tax will be handed straight back to oil and gas producers. How can it be right that we are subsidising oil and gas projects, which companies have said would happen anyway, to this level? It is an insult to families who are struggling and it makes a mockery of our climate commitments.

I turn to electricity generation and the excess profits in the electricity sector.

The hon. Member is making a very passionate case. A similar question was asked earlier of her Front-Bench colleague, the hon. Member for Ealing North (James Murray), but I would be keen to know when shadow Ministers last met industry representatives in Aberdeen to discuss their views on the matter. I ask out of interest.

As the hon. Member knows, Labour has been consulting regularly with organisations and stakeholders about the matter. We are willing to meet anybody who would like to meet us. Our door is open.

We called for the windfall tax months ago and are glad to see that the Government are taking it forward, but I have to say that they have been all over the place on the issue. In May, it was suggested that the Chancellor had asked the Treasury to draw up plans for a windfall tax on excess profits by electricity generators. I really wish that the Government had been vocal on the issue when Labour raised it months ago. As hon. Members will know, the price of electricity is closely linked to the price of gas; electricity prices have therefore been pushed up, although the costs of generating electricity from renewable sources have not changed. That is leading to significant profits for the sector. It was reported that such a windfall tax could raise up to £10 billion, but the Bill says nothing about the electricity generation sector.

As the Government have gone quiet on wider plans to decouple electricity prices from the price of gas, I would be grateful if the Financial Secretary would shed some light today on the Government’s plans for the electricity generation sector. It is clear that the market needs urgent reform so that it delivers for consumers and businesses. I hope that she can tell us why the Government are delaying bringing forward an energy market reform Bill that will finally break the link between gas and electricity prices.

Hon. Members have mentioned the support announced alongside the windfall tax. Of course it is a relief to our constituents that the Government have finally brought forward payments to help with energy bills and have scrapped their proposed “buy now, pay later” scheme, but we think it simply wrong that owners of multiple properties will receive the £400 payment for each and every property that they own and live in. There are surely far better uses for the money than that, so I urge the Government to think again.

Although we will support it today because we have long argued for a windfall tax on oil and gas producers to help people with soaring energy bills, we know that the Bill will not be enough. It is simply not ambitious enough. We need a long-term plan to guarantee the UK’s energy security and bring down bills for families. We have called for an acceleration of home-grown renewables and new nuclear, a plan to double onshore wind capacity and reform our broken energy system, and a national mission to retrofit 19 million homes to save households an average of £400 a year on their bills.

Will the hon. Lady give way?

I think that I have already been very generous.

Given the crisis facing the Conservative party, I do not have much confidence in them to deliver these essential priorities for Britain. While they spend the summer arguing among themselves, we on this side of the House will continue to provide the leadership that our country needs, just as we have with the windfall tax. We will stand up for families through the cost of living crisis, we will back British businesses and we will provide economic security for our country.

It is a pleasure to close this important debate on behalf of the Government. We have talked today about the context of the Bill: the high oil and gas prices, and the extraordinary profits that are being received by the industry while working people struggle with the cost of living. We are introducing a temporary, targeted levy to fund cost of living support, at the same time as encouraging companies to invest.

Let me start by responding to some of the points made by the hon. Member for Ealing North (James Murray). He criticised our levy for not raising enough, but, as was pointed out by the hon. Member for Aberdeen South (Stephen Flynn), Labour’s proposal would have raised only £1.2 billion at the time when it was made, whereas our levy will raise £5 billion—more than the £4 billion called for by Greenpeace, more than the £3.7 billion called for by the Green party, and, as I have said, significantly more than the amount proposed by the Labour party.

The hon. Member for Ealing North criticised our scheme because it will encourage investment, while the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) said that we needed domestic energy security. We are ensuring that the important oil and gas sector will continue to invest so that we have that domestic energy security. The hon. Gentleman criticised us for not listening to industry, but I noted that neither of the Labour Front Benchers was able to say how or when they had engaged with industry. As Conservative Members know, last month the Chancellor held an industry roundtable which was attended by me and by the former Exchequer Secretary, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately).

Let me quote some of what has been said by representatives of the industry about our investment proposal. Orcadian Energy has said:

“We believe the immediate investment allowance, included in the Energy Profits Levy, has transformed the attractiveness of domestic oil and gas projects for companies extracting oil and gas in the UK and it should spark further investment in the North Sea.”

Cornerstone Resources has said that there has been

“more interest in partnering with us”

in the last few weeks. I could go on, but what we are trying to do is raise money to help with the cost of living, at the same time as encouraging industry to invest in a vital sector.

Let me now answer some of the questions put to us by the hon. Member for Ealing North. First, I can confirm that the Chancellor supports the Bill. I also want to respond to the point about consultation. The hon. Gentleman was, of course, encouraging us to do this a long time ago, but now he says that we should have consulted for longer and, therefore, introduced the measure later. We have sought to engage, and put the industry on notice, as much as possible regarding the announcement of the levy. Ministers in my Department have been in regular contact with the industry and we also undertook a short period of technical consultation on the legislation for the levy. Hon. Members will know that draft legislation was published on 21 June, with stakeholders able to provide technical feedback on it until 28 June.

The hon. Member for Ealing North asked what we were doing about the electricity generation sector. As the former Chancellor said at the time, that is something we are urgently looking at. The hon. Gentleman said that we should follow Labour’s plan. Well, let us remember what Labour’s plan is. Labour has put forward £100 billion-worth of spending proposals, of which only £10 billion-worth are fully funded.

I would like to mention the passionate and important speech from my hon. Friend the Member for Waveney (Peter Aldous). He rightly identified the need to balance short-term measures with long-term investment, and I hope that that is what we are doing. He raised the importance of renewables. As I have had the opportunity to discuss with him before, there are other tax levers and non-tax levers to support non-oil and gas investment, including the super deduction and the UK’s research and development tax credit scheme. There is also the contracts for difference scheme, which provides developers of low carbon electricity generation with direct protection from volatile wholesale prices, and the £1 billion carbon capture infrastructure fund.

My hon. Friend also asked about the timeframe. That is an important point, because this is a temporary measure. There is a sunset clause in the legislation. It is rare to include a sunset clause, but we have done so to underline that this is a temporary measure with a timeframe of 2025. He raised the importance of dialogue with the industry, and I reassure him that we have engaged fully with the industry and will continue to do so.

On carbon capture infrastructure, the Minister is well aware that the Scottish cluster has been made a reserve and been let down yet again. Can she define what “reserve” means, because nobody seems to know? Does she expect one of the two selected projects to fail, at which point the reserve would step up, or is it a question of dangling a carrot in front of it? What does “reserve” really mean, and why do the Government not just make the Scottish cluster a track 1 cluster?

The hon. Member makes an important point, because we value the investment and work that is going on in Scotland in the oil and gas sector and in renewables. He knows that, because I and Ministers from the Department for Business, Energy and Industrial Strategy have stood at this Dispatch Box and engaged with him regularly on this. He is right to identify that that cluster is in reserve, and I am sure these matters are being discussed with the relevant Ministers in BEIS.

I recognise the points that the hon. Member for Aberdeen South made about the sacrifices made by those who work in this sector. I am grateful to him for making those points, which I am happy to associate myself with. He asked what the normal price was, and I would like to refer him to the comments that the former Chancellor made when he was questioned on this by the Treasury Committee. He said:

“The last time this was done, a price target was published, which was $74 or $75 for Brent…If you look at average Brent price over the last five or 10 years, that will give you something like $60 or $70 for oil…so that gives you a sense.”

This is something we will be considering in due course.

I was of course aware of the former Chancellor’s fluff in relation to this topic. Is the Minister confirming to the House and to the industry, which will be watching, that if the price of oil falls to around $60 or $70 a barrel, the levy will be no more?

As I have just said in responding to the hon. Gentleman’s earlier point, the former Chancellor said that that “gives you a sense”, and I too am happy to relay that sense of where the prices would be, but we also have the long-stop date, which should give the industry some certainty as to when this will finally come to an end.

I welcome the hon. Member for Wakefield (Simon Lightwood) to this place. I was born and made in Leeds so I am very pleased to welcome a neighbour, in one sense of the word, and to hear him extol the virtues of Wakefield. He made a passionate speech about standing up for victims of sexual abuse and I welcome him to his place in the House of Commons.

The hon. Member for Bath (Wera Hobhouse) asked for bold and swift action, and that is what this Bill is about. Tonight this House has the opportunity to support the introduction of an energy profits levy on the extraordinary profits of UK oil and gas producers. It has the opportunity to support investment in the North sea through the levy’s investment allowance, and to support the automatic expiry of the levy in law, giving companies additional reassurance that the levy is temporary. This is a balanced approach that allows the Government to deliver support to families while encouraging investment and growth. For those reasons, I urge Members of this House to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time.