Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how solar feed-in tariff projects and the pre-determined revenue streams they deliver will be considered under the Electricity Generator Levy.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
From January 2023, a 45 per cent tax will be levied on extraordinary returns being realised from non-carbon electricity generators, including solar generators, in the UK. The measure will raise around £14.2 billion over the scorecard and help fund support for households and businesses with their energy bills as well as vital public services.
The levy will only be applied to a measure of extraordinary returns defined as returns from selling electricity for a period at an average price of more than £75/MWh. This is approximately 1.5 times the average price of electricity over the last decade. The Government considers this to be a proportionate approach to recovering a proportion of the extraordinary profits electricity generators are receiving whilst leaving them with a sufficient level of return to incentivise investment required to transition to net zero.
The levy will be limited, through a de minimis threshold, to those groups generating more than 100 Gigawatt-hours per annum of electricity from in scope generation assets in a qualifying period and will only be applied on extraordinary profits in excess of £10m for the group. This means smaller generators will not be within scope of the levy.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of the Electricity Generator Levy on the financial viability of (a) solar projects already in operation and (b) solar projects under planning consideration; and what assessment he has made of the impact this will have on reaching the solar ambitions set out in the British Energy Security Strategy.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
From January 2023, a 45 per cent tax will be levied on extraordinary returns being realised from non-carbon electricity generators, including solar generators, in the UK. The measure will raise around £14.2 billion over the scorecard and help fund support for households and businesses with their energy bills as well as vital public services.
The levy will only be applied to a measure of extraordinary returns defined as returns from selling electricity for a period at an average price of more than £75/MWh. This is approximately 1.5 times the average price of electricity over the last decade. The Government considers this to be a proportionate approach to recovering a proportion of the extraordinary profits electricity generators are receiving whilst leaving them with a sufficient level of return to incentivise investment required to transition to net zero.
The levy will be limited, through a de minimis threshold, to those groups generating more than 100 Gigawatt-hours per annum of electricity from in scope generation assets in a qualifying period and will only be applied on extraordinary profits in excess of £10m for the group. This means smaller generators will not be within scope of the levy.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he made an estimate of the predicted tax revenue from extending the Energy Generator levy to cover combined-cycle gas turbine generators before 17 November 2022.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
From January 2023, a 45 per cent tax will be levied on extraordinary returns being realised from non-gas electricity generators in the UK. The measure will raise around £14.2 billion over the scorecard and help fund support for households and businesses with their energy bills as well as vital public services.
While gas generators are experiencing increased revenue from the substantial increase in the market prices of electricity, they are also impacted by the substantial increase in the price of gas. The inclusion of gas generators could have unintended impacts on electricity pricing with implications for the market as a whole or on certain business models. The approach we have taken is consistent with gas generation being excluded from similar tax and regulatory interventions overseas.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department have made an assessment of the potential revenue impacts of equalising the Investment Allowances for the Energy Profit Levy and the Energy Generator Levy.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Energy Profits Levy (EPL) was introduced in May in response to sharp increases in oil and gas prices over the past year. At the Autumn Statement 2022, the Chancellor announced that the rate of the levy would rise by ten percentage points to 35 per cent, effective from 1 January 2023. The levy has also been extended until 31 March 2028.
The Electricity Generator Levy (EGL) will be introduced from 1 January 2023 as a new, temporary 45 per cent tax levied on extraordinary returns being realised from certain electricity generators in the UK. The EGL is charged on a different base to the EPL. The EPL is applied to total profits, whereas the EGL will only apply on the excess portion of returns above the £75/MWh benchmark price – well above historic levels.
Renewable generators will be able to deduct their investment costs from their taxable profits for the purposes of Corporation Tax.
New renewable generation will continue to be eligible for the government’s generous Contracts for Difference (CfD) scheme. Since 2014, the CfD scheme has enabled around 26GW of new low-carbon capacity, with generators receiving almost £6 billion net in price support to date. Electricity generators will also continue to be able to claim relief for their investments from the Corporation Tax they pay.
The Office for Budget Responsibility’s (OBR) forecast at Autumn Statement 2022 estimates revenues from EPL are expected to be £41.6 billion between 2022-23 and 2027-28. This is inclusive of the impact of the investment allowance, consistent with previous revenue projections for the levy. The OBR expect the Electricity Generator Levy to raise £14.22 billion over the same period.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department produced a forecast of any changes in tax revenue resulting from the Investment Allowances on the Energy Profit Levy before 17 November 2022.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Energy Profits Levy (EPL) was introduced in May in response to sharp increases in oil and gas prices over the past year. At the Autumn Statement 2022, the Chancellor announced that the rate of the levy would rise by ten percentage points to 35 per cent, effective from 1 January 2023. The levy has also been extended until 31 March 2028.
The Electricity Generator Levy (EGL) will be introduced from 1 January 2023 as a new, temporary 45 per cent tax levied on extraordinary returns being realised from certain electricity generators in the UK. The EGL is charged on a different base to the EPL. The EPL is applied to total profits, whereas the EGL will only apply on the excess portion of returns above the £75/MWh benchmark price – well above historic levels.
Renewable generators will be able to deduct their investment costs from their taxable profits for the purposes of Corporation Tax.
New renewable generation will continue to be eligible for the government’s generous Contracts for Difference (CfD) scheme. Since 2014, the CfD scheme has enabled around 26GW of new low-carbon capacity, with generators receiving almost £6 billion net in price support to date. Electricity generators will also continue to be able to claim relief for their investments from the Corporation Tax they pay.
The Office for Budget Responsibility’s (OBR) forecast at Autumn Statement 2022 estimates revenues from EPL are expected to be £41.6 billion between 2022-23 and 2027-28. This is inclusive of the impact of the investment allowance, consistent with previous revenue projections for the levy. The OBR expect the Electricity Generator Levy to raise £14.22 billion over the same period.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the Autumn Statement 2022 on large-scale, long-duration energy storage in the UK.
Answered by James Cartlidge - Minister of State (Ministry of Defence)
As set out in the British Energy Security Strategy, the government remains committed to encouraging all forms of flexibility with sufficient large-scale, long-duration electricity storage to balance the overall system.
As part of the Autumn Statement the government has published a technical note on the electricity generator levy. This sets out the government’s view of how the tax will operate, including the intention not to apply the levy to pumped storage hydroelectricity or battery storage.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of increasing the Lifetime ISA limit.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The Lifetime ISA is intended to support younger people saving for their first home or for later life by offering a generous government bonus on up to £4,000 of savings each year. These funds, including the government bonus, can be used to purchase a first home up to the value of £450,000.
The Government has no current plans to increase either the £4,000 Lifetime ISA subscription limit or the £450,000 property price cap.
The Government considers that the £450,000 price cap is suitable to support most first-time buyers across the UK, who typically purchase less expensive properties than other buyers, while ensuring sustainable public finances.
The Office for Budget Responsibility forecast that bonus payments will have an exchequer cost of over £3 billion between 2021 and 2027. The propertys price cap ensures that this significant investment of public money is more precisely targeted towards households that may find it more difficult to get onto the property ladder.
However, the Government continues to keep all aspects of savings tax policy under review.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 25 February 2022 to Question 126560 on Energy Bills Rebate, whether his Department plans to (a) put a lump sum of £200 on the meters of people that use pre-payment meters or (b) use the tariffs set by energy companies to do that.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
The Department for Business, Energy and Industrial Strategy (BEIS) will work closely with industry and consumer groups to ensure pre-payment customers receive the £200 reduction from October in a way that is convenient for them. BEIS will consider how best to recoup the reduction from customer bills, including for pre-payment meter customers.
This will be done through a public consultation in the spring.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 25 February 2022 to Question 127250 on Energy Bills Rebate, what mechanism his Department will introduce to recoup the £200 energy bill reduction for people with pre-payment meters.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
The Department for Business, Energy and Industrial Strategy (BEIS) will work closely with industry and consumer groups to ensure pre-payment customers receive the £200 reduction from October in a way that is convenient for them. BEIS will consider how best to recoup the reduction from customer bills, including for pre-payment meter customers.
This will be done through a public consultation in the spring.
Asked by: Alan Whitehead (Labour - Southampton, Test)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what financial support pre-payment meter customers who do not live in council properties Band A-D will receive when the cost of energy increases in April 2022.
Answered by Simon Clarke
Domestic energy customers will receive the £200 reduction on their energy bills this autumn regardless of their type of payment method. This is alongside the wider support available, such as the Warm Home Discount and Winter Fuel Payment and Cold Weather Payment.
Households that are not directly eligible for the council tax rebate might be eligible for the discretionary funding administered by local authorities. The Department for Levelling Up, Housing and Communities has published guidance on eligibility for the council tax rebate and the discretionary funding.