Energy

Alan Brown Excerpts

Tuesday 7th March 2023 Commons Chamber

[Amanda Solloway]

The instruments were laid between 11 January and 23 February 2023, and their purpose is to ensure that benefits from the alternative fuel payment, both domestic and non-domestic, are passed through to consumers. Throughout this winter, the Government have delivered critical support to households, businesses and other non-domestic consumers in response to the unprecedented rise in energy prices. The Government brought forward emergency legislation on energy support, paving the way for this support package to be delivered rapidly across the entire United Kingdom.

The alternative fuel payments scheme provides support to households, organisations and businesses that do not use mains gas and use alternative fuels such as heating oil. Eligible domestic consumers using alternative fuels will receive a one-off fixed payment of £200. Non-domestic consumers will receive £150.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Can the Minister tell us how many households are still waiting to access the £200 payment?

[Amanda Solloway]

I thank the hon. Gentleman for that question. With his permission, I will get back to him with the answer.

The pass-through requirement regulations are an important part of the support package and of ensuring that support reaches those who need it. The alternative fuel payment and non-domestic alternative fuel payment pass-through schemes set out in the regulations take the same approach as other energy schemes, particularly the energy bills support scheme and the energy bill relief scheme. They make it mandatory for intermediaries to pass the financial benefit of the schemes through to end users, which is necessary because that benefit is being delivered through electricity suppliers. In some cases, a supplier will have a contract with an intermediary such as a landlord or a heat network rather than with the end user, so we need to ensure that the support that it provides to the intermediary is passed on to the end user in a fair way.

Let me clarify what I mean by “end user”. In the case of both the alternative fuel payment and the non-domestic alternative fuel payment, an end user is an individual who consumes energy and pays for its usage through an intermediary such as a landlord. We are talking about tenants of different types—they could be domestic tenants, businesses or any kind of organisation.

Like other energy schemes, the schemes set out in the regulations require that support be passed on in a “just and reasonable” way. The regulations have been drafted in that way to account for the many kinds of relationship between an intermediary and an end user. If we used a narrow definition of “just and reasonable”, we could run the risk of inadvertently excluding some intermediaries from the pass-through requirements.

The regulations also accommodate scenarios in which there are multiple end users to whom intermediaries pass on support. They make it clear when and how intermediaries should communicate with end users regarding the benefit that is being passed on.

Our approach to enforcement is consistent with the approach taken in other energy schemes, particularly the energy bills support scheme in Great Britain. If an intermediary does not pass on the benefit to a user who is entitled to it, that user will be able to pursue recovery of the benefit debt through civil proceedings. Should a court rule in the end user’s favour, the end user will be entitled to the payment plus interest at 2% above the Bank of England base rate.

The Government have published guidance on gov.uk to ensure that the requirements are clear to all parties. If necessary, there are also template letters that tenants can use to contact their landlords if they are concerned about their energy bills. The Government are working with a wide range of stakeholders to ensure that the pass-through regulations work for everybody in scope, including vulnerable people and vulnerable groups.

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is quite incredible that we are debating these SIs in the main Chamber today. They should never have been on the Floor of the House. This is proof that, apart from othering asylum seekers, this zombie Government are just padding out what would otherwise be normal Government time. It is also ridiculous that, six months down the line from announcing the energy support scheme, so many people are unfortunately still waiting for the moneys they are due. Can the Minister confirm whether these regulations and the applications being opened up for the alternative payment will now resolve the park home issue as has been long promised? For clarity, will these regulations resolve that issue?

It would be good to know how many people are still waiting on their moneys. Also, why do so many people have to jump through hoops and apply for alternative fuel support? Why do people in areas such as the highlands and islands, where there are many more people off the gas grid than there are in Northern Ireland, have to apply when every household in Northern Ireland gets the £200 payment anyway? It is clear that people in the highlands and islands of Scotland have fallen through the cracks, and the Government should look at this again, especially if they are going to repeat the scheme in future.

The first SI is about the pass-through of payments from the likes of commercial landlords. Does the Minister know how many payments are estimated to have been made to landlords that still have not been passed on? As the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead) said, the Joint Committee on Statutory Instruments confirmed that the Government expect information to be provided to them from these commercial landlords, except that there is no enforcement mechanism. This is a defective SI, yet despite that, the Government have chosen to bring it back to the Floor of the House in the main Chamber and do nothing about support or about changing the defects reported by the Joint Committee. Have the Government considered any such mechanism to allow the enforcement of information reporting? If not, and if there is no way to enforce it, how can they assess whether this support, this taxpayers’ money, is going to those who need it, rather than being held up by intermediaries? This money should be passed on to the people to whom it is rightfully due.

The truth is that there is no incentive for commercial landlords to report, even those who are doing the right thing in passing on the money, because it is just time-wasting for them. Why should they see any merit in reporting what they have done? That means that, overall, the Government will not be able to assess the scheme’s success in getting the money to those to whom it is due.

The key question is, why is the onus being put on individuals to pursue any moneys they are owed as a civil debt? In reality, how many people know they can go to court to claim the £200 they perhaps did not receive? Again, that is beyond most people’s knowledge and ken.

Looking forward, as we come to the end of the initial energy price guarantee scheme, and given that the Government have borrowed a lot less money than they thought they would, they really must look at reducing bills. Even holding bills at £2,500, on average, is not enough because it would keep 6.5 million households in fuel poverty. We are calling for a £500 reduction. It is also critical that they review the support for small businesses, which will receive an estimated £200 on average. That is a drop in the ocean compared with their high energy bills. The Government must look at that as we come to the new financial year.

Energy Suppliers: Customer Credit

Alan Brown Excerpts

Wednesday 22nd February 2023 Westminster Hall

[Drew Hendry]

The hon. Lady makes a good point. There has been a great deal of debate in the industry about the practice of ringfencing, and whether that should be carried forward. I might touch on that shortly. The fact is that this money is being used in an incorrect way, whether it is propping up a company or aiding a company that needs it to survive, in a way that is not normal in business.

Notwithstanding the good point made by the hon. Lady, it is almost beside the point. The fact is that this money should not be used by companies, without the explicit permission of the people who have that money with them. Do not forget, they are not offering a shareholding to those customers. They are not saying, “Because you have a credit, as other people might have a credit with our company and have bought shares, we will give you back a dividend.” They are not applying any dividend. They are just keeping the money, and it is not their money.

I have some personal experience with OVO because, having started this campaign and looked into what was happening, I studied my own account, and lo and behold, I had a credit sitting on my account that I was not aware of, so I did some digging around. I have a smart meter that was installed and, despite several complaints and even a change of meter, OVO has still not been able to rectify the issue, so I have some sympathy for people who are not getting correct readings and are getting incorrect bills.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

My hon. Friend is making an excellent speech. The absolute crux of this is, as he says, protecting customers’ credit. I have an example of the opposite thing. I went to switch supplier, then I got a bill for £1,000 because I had been inaccurately billed for so long. That could have tied me to that supplier for a long time, because I might not have been able to afford to switch. It shows another failure in the market and failure in the billing process. Does my hon. Friend agree?

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I reassure you that I will not take 20 minutes, which I am sure will please everybody.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for bringing forward this important debate. As he said, the debate is about people’s money and their legitimate access to it. As you alluded to, Mr Betts, it is surprising that we are hearing from the Front-Bench spokespeople at 10 o’clock in the morning in this important debate. Given how many of us have been contacted by constituents who feel that they have been fleeced, and who are worried about turning on their heating and being able to eat, that is surprising. I suppose we can deal only with who is here.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey on how he set the tone for the debate. He said he would not list Government failures or attack the Government, and that he wanted to work with the Minister. That is commendable. I am not sure that I will be able to avoid criticising the Government, but we will come to that later. As my hon. Friend said, this debate is about people’s money; it is about people’s credit and what the companies do with it. I will turn to some of the examples he gave, particularly those in which people are in credit—effectively, companies owe them money—who should be secure, yet they are so frightened that they do not turn on their heating because they hear about the cost of living crisis. That struck me.

I pay tribute to the Wise Group, which works with vulnerable people. I was at an event last night, and heard an example of somebody the organisation engaged with. This individual was on a prepayment meter. They were so concerned about the cost of energy that they were scrimping on what they were eating so that they could put a £700 credit balance on their meter. They wanted to build up some form of insurance, as they saw it, by building up a £700 credit on their prepayment meter—a massive up-front payment. I cannot understand why that individual was not contacted by the energy company and asked why they had put so much money on their meter and whether everything was okay. It took engagement from the Wise Group to resolve the issue.

[Drew Hendry]

My hon. Friend’s point about fear is something that I perhaps did not cover enough in my remarks. The issue is not only that people fear not having enough to pay a bill. It has been in common parlance that we should be worried about energy costs, and people are really worrying. There is also the fear that, when people are struggling to get by—I do not know how many people in this room this will resonate with—and a bill comes in, they sometimes do not want to look at it or acknowledge that it is there; they put it away. People might panic about their bills without realising that they actually have money. My hon. Friend’s point about people’s fear is central to the fact that people should be getting their money back.

[Alan Brown]

I absolutely agree. That fear and the stress that comes with it were observed by the Wise Group in its report. Some 66% of people the group engaged with believe that their mental health has suffered because of the fear and concerns they have about dealing with the cost of energy. That has further detrimental impacts on individuals, but also consequential effects for the NHS and society.

In his fine contribution, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey mentioned the struggle to get proper information about the companies’ credit balances and how that is not transparent. Why is that? Back in 2018, Ofgem estimated that companies would hold surplus credit balances of somewhere between £600 million and £1.4 billion. How can the regulator itself look into the matter and not get an accurate figure? It beggars belief. We are now nearly five years down the line, and we still have no idea how much money these companies are holding. It is outrageous. I call on Ofgem to fully get a grip of this matter.

As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey said, there should be transparent reporting, because we need a clear understanding of what these companies are holding. Had we had that understanding previously, we would not have had so many retail companies going bust because they did not have sufficient money and capital. Just reporting customers’ credit balances would give an indication of that, as well. It is concerning to hear about these companies’ performances, particularly OVO. I also pay credit to Mrs Raw for allowing that example to be given. Imagine a customer who is £1,000 in credit being asked to increase their direct debits.

[Drew Hendry]

I just want to underline the point that it is £1,796—nearly £2,000. That is nearly a year’s worth of bills. It is an absolute scandal.

[Alan Brown]

I thank my hon. Friend for clarifying that. It brings me to the two points: first, the credit balances; and secondly, the direct debits being increased. As The Times reported in December 2022, there is a real fear that companies were basically gaming the system by massively increasing the direct debits. I know this from anecdotal evidence from constituents, and I have tried to raise this with Ministers. I was afraid that when companies saw the Government energy support coming down the line, they were increasing direct debits and putting people on higher tariffs, because that would give them a bigger subsidy back from the Government. I really hope that the Government will look at that. It is commendable to give energy support to each household, but we need to ensure that householders, taxpayers and bill payers get 100% of the benefit of that, instead of companies gaming the system. That is another aspect to consider.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey for doing the work up front, and speaking with individual companies to try to get details about individual policies. It is certainly concerning that ScottishPower has said, “Yes, we’ll adjust the direct debit, but in doing so we are actually still keeping that credit balance,” which is the company keeping money for itself. I disagree slightly on Centrica and E.ON, because it is commendable, at least, that they want a system that ringfences and protects customers’ credit balances, although that should be the bare minimum. Why should customer credit not be protected? That should not even be up for debate. Some companies do automatic returns at year end, such as EDF, which is probably an acceptable way to work.

Returning to the key issue, this is the basic principle: credit is customers’ money that they have paid in advance to the energy company. It is logical that their money should be protected, and that they should be able to access it if needed. However, we also have to acknowledge that a system that allows customers to build up credit does allow smoother, equal payments over the calendar year, equalising payments over summer and winter. There are benefits in such a system: it allows steady, monthly payments, so that people can understand what they are paying and—in theory, if the smart meter and billing system work properly, which is unfortunately not always the case—will not get sudden increases in bills landing on their doorstep, causing further concern. We have to admit that allowing customers to build up credit is also to the customer’s advantage, because it smooths out their payments. We should not lose sight of that.

To be fair, if every single customer decided to access their credit at the end of the summer, the system would not work properly either. If customers withdraw all that credit, and then build up debit in the winter, companies will need to capitalise more, which means borrowing more, which means actual bills will go up. There needs to be some sort of balance overall, whereby we ensure customer balances are protected and accessed, otherwise bills will unfortunately end up going up in the long run anyway.

[Drew Hendry]

I am grateful to my hon. Friend for giving way again. I am taking advantage of the time that we have, Mr Betts—I apologise for the number of interventions, but this is an important point to clarify. The point he makes about having a fair mechanism in place to ensure that people are not being treated punitively over their credit balance is important. I hope the Minister will look at that to ensure that people are protected.

[Alan Brown]

I fully agree with my hon. Friend, and it will be good to hear the ministerial response. I said that I did not think I would be able to get through my speech without criticising the Government, so here it comes: companies using customer credit as working cash flow is what caused the market failure. That market failure was on the Government’s watch, and Ofgem was asleep at the wheel. Since the retail energy market has failed, we still have an inadequate response on how the Government and Ofgem will deal with this. It is outrageous that these companies went bust having used customers’ credit and then walked away, but then there is the double whammy of all the other bill payers paying the next company to restore the customers’ credit. We are paying twice, with other bill payers footing the bill.

I am also a member of the Business, Energy and Industrial Strategy Committee. Initially, we had a one-off hearing when companies started to go bust. The then Secretary of State and now former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), appeared in front of the Committee. His attitude was that, “Companies come, companies go. It is a free market; that is what happens. We know that some companies tend to go bust when it is time to pay their renewables obligations.” That laissez-faire attitude that the free market knows best is just ridiculous, and it shows that he was unsuited to be the Chancellor. It is funny how he did not like how the free market operated when he saw the effects of his policies. That meant he was putting his hands up and saying, “It is okay. We don’t mind companies going bust, owing customers money or owing money for renewables obligations”. The renewables obligation is supposed to fund energy-efficiency upgrades, help us towards net zero and help lower people’s bills. It was a dereliction of duty, and what he said in front of the Committee genuinely shocked me.

It was crystal clear at that time that companies must have sufficient capital and a robust assessment must be in place for any new entrants to the market. There needs to be an ongoing assessment, especially as we have seen the cost of buying energy increase, and Ofgem needs to clearly and periodically check that companies still have access to enough capital. I am trying to be balanced, though. There is another benefit to companies having some customer credit on the books, and that helps in the advanced purchase or hedging of energy—for looking ahead—which smooths out risk. Again, as long as companies are not overly reliant on customer credit balances and there is a robust system in place that assesses how much customer credit is being used for that hedging and that look-ahead, that is okay but, again, this is unfortunately another failure of Government. When Bulb, the seventh biggest energy company, went bust, it was too big to go through the normal process of another company picking it up, so it was the first company to begin the supplier of last resort administration process. The Government did not allow them to hedge ahead, costing taxpayers up to £1 billion more. Companies must be able to operate and hedge ahead, but that comes back to having the right capital in place.

It is unfortunate that Ofgem has flip-flopped on customer credit and how to deal with this since 2018. Of course, in that period from 2018 to 2022 30 companies went bust, while Ofgem was still dithering and wondering what to do. It is time that Ofgem came up with a solution. I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey for what he has proposed. As he says, this is customers’ money. I refer the Minister to the Business, Energy and Industrial Strategy Committee report published in July 2022 called “Energy pricing and the future of the energy market”. Key recommendations 117 and 118 address customer credit, particularly 118, which is about Ofgem coming up with a system that manages these complexities and reporting back to the Committee and Government to agree a way forward. I will be interested to hear the Minister’s response because there has not been a suitable Government response to the report as yet—I look forward to hearing more. The point is that customers’ money should be protected. To throw in one last request, it is high time we got a social tariff to protect those that need it most and a much fairer system of paying for our energy.

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[Amanda Solloway]

I noticed that point in the hon. Gentleman’s speech. Maybe we should look at whether there could be some automatic repayment. I believe that that has been looked into before, but I am certainly prepared to do so and to give an assurance on that.

[Alan Brown]

Everybody here welcomes what the Minister says about looking at automatic refunds. As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) said, Ofgem does not currently require refund requests to be processed within a specific time. It is only if a customer closes their account to switch that there are stipulations on the time period in which their credit must be returned. The issue in the short term is that the companies are not obliged to keep to a timescale to return the credit, so I welcome the Minister’s comments about automatic refunds.

[Amanda Solloway]

I thank the hon. Member. This is an important debate, not only because it is on an important topic, but because it is important for me to listen and understand the issues.

Ofgem recently provided a progress update. It has opened formal compliance engagement with 12 suppliers and has required them to submit remedial action plans to address its concerns. To date, Ofgem has satisfactorily resolved 95% of the concerns and has secured several supplier improvements in relation to policies, processes and controls, credit balance arrangements and staff training.

Ofgem has proposed further measures to protect consumer credit balances. The reforms would require suppliers to have enough working capital to run without needing to rely on customer credit balances, about which concern has been illustrated today. The reforms should further ensure that suppliers do not gain a financial advantage from holding credit balances. Ofgem’s reforms will mean that when an energy supplier fails and Ofgem’s safety net quickly moves the customers to a new energy supplier, the customer credit balances with the failed supplier are limited in size and can, where necessary, be ringfenced.

I was unaware of the problem with smart meters, which I will certainly look into. I mentioned the app problem; I was unaware that there was an inconsistency between the reports from the app and from the website, but I am happy to look into that.

Once again, I thank the hon. Member for Inverness, Nairn, Badenoch and Strathspey for securing the debate and for his campaign to encourage customers to take more control over their energy account balances. I also thank him for noting that we must ensure that we are as helpful as possible. Customers must be at the heart of this, because it is the consumer who is affected.

The Government and Ofgem are taking clear and firm action to ensure that customers are treated fairly, are protected and receive good service. The Energy Security Secretary has written to energy suppliers about the importance of setting direct debit payments more accurately. He has also made it clear that protecting consumers is a top priority for this Government. Finally, one of the early meetings that I will have in my new role will be with the Ofgem CEO. I shall press him on what can be done to ensure that customers get their money back swiftly and easily, and to prevent suppliers from building up consumer credit balances.

IMF Economic Outlook

Alan Brown Excerpts

Tuesday 31st January 2023 Commons Chamber

[James Cartlidge]

I do not know the specific circumstances of why the café the hon. Gentleman refers to is struggling to recruit; I have no specific knowledge of it. I am sure it offers a wonderful breakfast when it is able to do so. What I can say is, talking in aggregate, and as is our slogan, we are proud to have almost the lowest unemployment for the best part of 50 years. It does present challenges when we have a tight labour market. That is why we think the best way forward is to ensure that we have the apprenticeships, skills and training to deliver the workforce to meet our growth ambitions.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The Minister continues the Tory playbook of excuses—global headwinds, global challenges, other countries having high inflation, Putin’s illegal war and the pandemic—but the reality is that the UK is the only G7 country facing a recession this year. Is that due to Tory incompetence, or is it the Brexit dividend?

Non-domestic Energy Support

Alan Brown Excerpts

Monday 9th January 2023 Commons Chamber

[James Cartlidge]

If the hon. Lady has a business that wrote in to the Department to contribute to the review and did not receive a response, I would be grateful if she forwarded me a copy of that correspondence so that I can look into it.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The energy profits levy measures are predicted to bring in £56 billion and most of that money is coming from Scotland, yet businesses across Scotland are left struggling, particularly in the hospitality trade. The Struther Farmhouse Tea Room in my constituency is facing a 500% increase in its gas bill, with its gas and electricity up by £25,000 in a year. Despite what the Minister says, these businesses are now reaching a cliff edge because Government support is estimated to be a maximum of £2,000 against these increases. How many small businesses and jobs does he think will be lost under the guise of Government fiscal prudence?

Greening the Financial System

Alan Brown Excerpts

Wednesday 30th November 2022 Westminster Hall

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for Sheffield, Hallam (Olivia Blake) on securing this debate. It is good to see Back-Bench participation.

The hon. Lady set the scene very well on the amount of investment required for us to achieve our climate goals, and on the specific impact that so few companies have, with 100 companies responsible for 70% of emissions. The scale of investment from the City of London makes it the equivalent of the ninth biggest polluter in the world. Those are very stark statistics.

I liked the key point about pension funds and looking at wider beneficiary considerations rather than just returns. Clearly, there is no point in having a high financial return if it results in greenhouse gas emissions that wreck the planet we live on. Also, the point about energy efficiency investment flatlining is key. We need to get more money invested into energy efficiency.

An answer that I got to a written question said that 12 million homes are still rated in EPC band D to G in terms of energy efficiency, so to get every property upgraded to band C by 2030 means that more than 1,000,700 properties need to be upgraded every year.

We heard from the hon. Member for Rother Valley (Alexander Stafford). I commend him on the work he is doing as chair of the all-party parliamentary group on environmental, social, and governance. I pledge to look out for its report. He made a key point about the risk of greenwashing and how we need to make sure that that does not remain part of the financial system. On greenwashing, I am always cynical when companies contact me and say, “Hurray! We have set a target. We have announced we are going to meet net zero. Will you congratulate us and promote us?” I never do that because I want to see the proof of the pudding.

As always, we heard from the hon. Member for Strangford (Jim Shannon), who made a very good contribution. He rightly pointed out that it is fine to have 10-point plans and other soundbites, but, as he said, we need meat on the bone. The reality is that we need a joined-up Government strategy to deliver. He touched on the risk of the Amazon’s deforestation and how we cannot allow investment that encourages that. It seems to me that we should encourage investment as part of the loss and damage considerations as we move forward as well. I did wonder if the hon. Gentleman slipped up slightly, and I have to ask if he is okay, because he did not once mention Better Together. I think that is the first time he has not done that.

Finally, we heard from the hon. Member for Reading East (Matt Rodda), who again highlighted the importance of the pensions industry in driving investment in brownfield regeneration to create renewable energy. What could be better than to regenerate in a sustainable way and actually help bring down emissions?

As many Members have said, it goes without saying that we do need to hit net zero, in line with the Paris climate agreement on a global scale, if the Earth is to have a proper future at all. Time is running out. But as well as fighting this existential threat, we do actually have fantastic economic growth opportunities arising from the green investment required.

As the hon. Member for Sheffield, Hallam said, an estimated $32 trillion of investment is needed globally by 2030 to tackle climate change alone. Instead of the bland rhetoric about being global Britain, there is actually a great opportunity for the UK to be a global centre for those financial flows. It will bring significant economic returns and help address our own economic challenges, including the ongoing cost of living and energy crisis. We have to remember that London recently lost its position as Europe’s most valuable stock market. This green concession could spur the necessary growth to help the UK regain its overall competitiveness.

The reality is that the UK will not lead the global green finance sector without the right regulatory framework to support it. At COP27, finance experts, including the former Governor of the Bank of England, Mark Carney, demanded the alignment of financial regulation with net zero. The reality is that the financial sector is exposed to financial risks that stem from nature loss, via the businesses they invest in, advise, insure and lend to. That was illustrated by the Bank of England’s first climate stress test, which concluded that UK banks’ insurers could end up taking on nearly £340 billion-worth of climate-related losses by 2050 without better mitigation and adaptation efforts.

Separately, the Green Finance Institute estimates that almost £650 billion-worth of infrastructure investment from UK organisations, planned to take place this decade, could face considerable climate risk. It is madness that the Government are trying to commit us to giving billions of pounds to Sizewell C, in an area that is subject to coastal erosion and the threat of increased sea levels due to climate change. That is not joined-up thinking when we are looking at infrastructure for the future.

The Financial Conduct Authority must have a duty to consider climate goals in dealing with its activities. The SNP’s proposed amendment to the Financial Services and Markets Bill could have had that effect. Had the amendment been accepted, it would have required the FCA to act in a way compatible not only with competitiveness and growth objectives, but with the Government’s climate commitments, in addition to strategic and operational objectives.

At the moment there is a disconnect between the Financial Services and Markets Bill and the Government’s work on transition plans. The COP26 commitment included the requirement for all UK regulated financial institutions and public listed companies to publish their net transition plans by 2023. To implement that, the Government pledged last year to legislate for mandatory transition plans through the UK sustainability disclosure requirements. But the Financial Services and Markets Bill fails to do so, and there is currently no other upcoming legislation to allow that to be implemented.

The Government’s transition plan taskforce, set up to develop the gold-standard transition plan guidance, recognises the importance of nature. By contrast, nature is not addressed in the Financial Services and Markets Bill, despite the Economic Secretary to the Treasury recognising in Committee that we cannot achieve our climate goals without acknowledging the vital role of nature. Other contributors touched on the importance of considering nature as well.

Even business is saying more needs to be done in terms of regulations. Numerous financial institutions, including Aviva Investors, Phoenix, Hargreaves Lansdown and Federated Hermes, have written to the Bill Committee backing a secondary statutory objective of facilitating the transition of financial services to net zero. Supplying goods and services to enable the global net zero transition could be worth £1 trillion to UK businesses by 2030. Accelerating the roll-out of low-carbon technologies could reduce household energy bills by up to £1,800 a year. Onshore wind is the cheapest form of energy generation, so, by blocking it for so many years, the Tories are adding money to consumers’ bills.

Get this right, and there are fantastic opportunities. However, Brexit Britain—a subject close to your heart, Mr Bone—is currently playing catch-up on green finance. The EU has legislated on a number of issues, which include corporate disclosures, climate-related obligations and sustainability-related disclosure in the financial services sector and the European green bond standard, while the UK lags behind. As the hon. Member for Rother Valley said, the UK also lags on taxonomy. There might be some failings that can be picked up and improved on, but the reality is that the UK lags behind.

A report by the social enterprise think-tank New Financial entitled “A reality check on green finance” claims that the value of green finance in Europe increased by 97% in 2021 compared with 2020 levels, to reach an overall total of €311 billion. It concludes that Government issuance tripled, and several nations launched sovereign green bonds as part of their covid-19 recovery plans. Meanwhile, activity in the private sector doubled year on year. The report also notes that, despite that massive increase in expenditure, green finance represented only 12% in all capital markets across Europe in 2021. By contrast, green finance in the UK accounted for only 6% to 7% of all capital markets activity.

It is clear that more must be done to green the financial services industry. It is imperative that the FCA is mandated to consider climate goals and that the Government improve legislation accordingly. To finish on a positive note, if we get this right, there are fantastic growth opportunities, green jobs and a just transition to net zero.

Economic Responsibility and a Plan for Growth

Alan Brown Excerpts

Wednesday 19th October 2022 Commons Chamber

[Andrew Griffith]

Just like the constituents of Arundel and South Downs, I do not want the constituents of Eddisbury to face any prejudice. My hon. Friend makes his point well, and I am sure that the Energy Minister will be listening.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

If the so-called energy price guarantee will reduce inflation by 4% or 5%, what will inflation go to in April 2023 when the Government remove it?

[Andrew Griffith]

I have learned not to make forecasts in life.

[Alan Brown]

You just did.

[Andrew Griffith]

I was citing external forecasts, rather than making forecasts of where energy prices in an unprecedented moment of global volatility will be six months hence. Maybe the hon. Member has a greater insight into that.

[Alan Brown]

I feel I have.

[Andrew Griffith]

No. Treasury officials will lead a review regarding the appropriate measures to support households and businesses with their energy needs beyond April, but without the taxpayer picking up an inappropriate share of the burden.

--- Later in debate ---

[Drew Hendry]

Again, the hon. Gentleman makes a fantastic point. The growth we are seeing from this Government is the growth in poverty and in inequality. That continues to rise and the Government are very good at driving it forward.

As I was saying, those off gas grid consumers are being given £100. Scotland is energy rich and a net exporter of energy. Renewable energy is six to nine times cheaper than the gas-fired power our prices are linked to. In Scotland we have the energy, but until we have the power our people will continue to be ignored over their basic needs and their potential.

After the Chancellor’s statement, the Scottish National party, through my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), tried to introduce some certainty for households terrified by the rising energy prices by tabling an amendment to the Energy Prices Bill that would have required Ministers to outline within 28 days how support after April would be provided to households. Labour failed to support that amendment. The Chancellor says that more difficult decisions will have to be made, which means cutting the funding for things that ordinary families and the most vulnerable rely on. We should note that the threat for those struggling by, many of them working people relying on universal credit, has not been lifted; there may be further reductions, on top of the fact that inflation has been three times higher than their last increase. Common decency demands that benefits must be fully uprated. Are the Government capable of that?

We should also remember that this Government still have not reversed the pernicious £20 a week cut to UC, yet the Chancellor had the cheek to say—this has been repeated today—that the Government’s priority will always be the most vulnerable. Does that include pensioners? This week, he was briefing journalists, including Robert Peston, who said this today, that the Government were abandoning the triple lock. With inflation rampant—today’s figure is 10.1%—this means further hardship for Scotland’s older people. Yet today, the Prime Minister says no. Is this another U-turn? Or is it like when she says that the energy cap will mean no family would pay more than £2,500 per year? Is it just—let me find some parliamentary language—questionable?

If the Government really mean that they care, they would reinstate the £20 a week to UC, scrap the bedroom tax, get rid of the odious rape clause and uprate benefits in line with inflation. They could choose to follow the progressive lead of the Scottish Government, who have brought in, among a wide package—[Interruption.] The Minister is laughing. The Scottish Government have brought in the Scottish child payment, which has risen now to £25 a week. That is helping to mitigate the callous cut made by his Government. They could choose to follow that progressive lead and to follow what the Scottish Government have done in doubling the December bridging payment from £130 to £260, at a time when families will need it most, in the depth of winter and at Christmas. The Government could pay for much of this by taxing the excess profits of companies that are clearly making them.

[Alan Brown]

My hon. Friend was talking about the Tories not keeping their pledge to protect the most vulnerable, and he has highlighted some awful policies that are making people more vulnerable. In addition, under this Government fuel poverty has increased by more than 50% and now affects 6.7 million households. So to say that the Government are protecting the vulnerable is, unfortunately, a sick joke.

[Drew Hendry]

My hon. Friend has said it all there—it is clear. To hear laughter this afternoon from Government Front Benchers about measures to mitigate poverty is shameful.

The Government could have taxed some of the excess profits, and companies are daring them to do so. Sometimes, as with the boss of Shell, they are asking the Government to do this. The Government could do this but they will not, because protecting the vulnerable is not what Tories do. It gets worse, because now the Bank of England will react with further interest rate rises, pushing mortgages to unaffordable heights for some homeowners and prospective buyers. As we have heard again today, the Government want to lay all the blame on the illegal war in Ukraine and on global conditions, but everybody knows that much of this is Tory-inflicted. A big part of that is Brexit. It has hamstrung businesses by starving them of vital staff; it has pushed inflation higher through import prices; the UK’s shocking balance of trade has been exposed; and it has ushered in a raft of new tax costs for businesses across the nations of the UK. As the former Bank of England Governor Mark Carney pointed out:

“In 2016 the British economy was 90% the size of Germany’s. Now it is…70%.”

That was before the clusterbùrach of the mini-Budget. Labour, with all the backbone of a squid, joined at the tentacles with this Tory ideology, is trying to pretend that somehow it will make Brexit work. Most Labour Members do not believe that, and it flies in the face of all the logic and informed opinion.

All this chaos is a timely reminder for the people of Scotland about why they should choose a different path. I say to people back home: look at what the Government are doing to you, to your communities, to your businesses, to your families and to your children’s futures. Let us make comparisons with the UK. Other countries similar to Scotland are wealthier and more equal, and have higher productivity, lower poverty, lower child poverty and lower pensioner poverty. Democracy can and will triumph. Scotland has the right to choose a very different path from this one, to build a better future as an independent nation and as an equal partner in the European Union—one that seeks to lift people up, not keep them down, and to live by the values of a welcoming, diverse and compassionate nation.

Economic Update

Alan Brown Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

That is a very important point. We have an issue in that we need our companies to invest more in R&D. We have a fantastic opportunity to be the world’s next silicon valley, with all the potential of our great universities and incredible levels of innovation, but I absolutely think there is more that we can do, and I will bear in mind my hon. Friend’s comments.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Since 2015, the value of the pound has dropped about 30% compared with the dollar. After this Government’s mini-Budget, the pound hit an all-time low against the dollar. Given that oil and gas, and other, related energy products are traded in dollars, is it not the case that, by absolutely tanking the pound against the dollar, this Government have added other costs to the cost of energy in the UK?

[Jeremy Hunt]

I am delighted that someone from the SNP is worried about the value of the pound, which I think shows that it matters to all of us. I would say to the hon. Gentleman, in all seriousness, that Governments cannot control the value of currency and should not seek to do so, but in so far as our actions affect the stability of our markets, including the currency markets, the one thing we can do is to show that we are balancing the books.

Economic Situation

Alan Brown Excerpts

Wednesday 12th October 2022 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

And the last word comes from Alan Brown.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I thought you were going to say “Last but not least”, Madam Deputy Speaker, but thank you.

According to figures published in connection with the mini-Budget, not implementing the corporation tax increase is predicted to cost the Treasury more than £2 billion in this financial year alone, and in subsequent years £12 billion, £17 billion, £18 billion and £19 billion: £68 billion in total. We can split hairs about whether or not that is a tax cut, but is not the reality that the Treasury’s own figures show that cosying up to business has created a £68 billion black hole?

[Chris Philp]

I thought you were going to say that you had saved the best till last, Madam Deputy Speaker.

It is important to have internationally competitive rates of corporation tax. Keeping it at 19% is not just for big businesses; it is for smaller businesses too, because any business with profits of over £50,000 will benefit. Many of these businesses have a choice about where to locate. They do not have to locate in the United Kingdom, but could go to America, to Geneva, Singapore or South Korea. Many of them are internationally mobile. We want them to choose to locate in the United Kingdom and to invest in the United Kingdom—including, of course, Scotland—and that is why we are maintaining a competitive rate of corporation tax. We still do not know what those in the Labour party think about this, because they will not tell us.

Energy (Oil and Gas) Profits Levy Bill

Alan Brown Excerpts

2nd reading
Monday 11th July 2022 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Will the Minister give way once more?

[Mr Clarke]

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.

--- Later in debate ---

[James Murray (Ealing North) (Lab/Co-op)]

I thank the Minister for setting out how North sea oil and gas producers will be affected by the measures the Bill seeks to introduce—even though he seemed unable to say the words “windfall tax” when referring to it at any point during his speech.

This Bill is long overdue. We are finally debating this legislation in Parliament, more than seven months after the shadow Chancellor first set out Labour’s plans for a windfall tax on oil and gas producers’ profits. In the seven months since Labour first called for a windfall tax, cost of living pressures for people have grown relentlessly, and in those seven months, oil producers’ profits have soared.

Since the start of this year, energy bills have spiralled by £700 for a typical household, inflation across the board has hit 9.1%, the highest in 40 years and, despite Tory smoke and mirrors with thresholds, average earners will still be paying £300 more in national insurance contributions by 2027.

[Alan Brown]

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?

[James Murray]

I look forward to the hon. Gentleman supporting Labour’s amendments and new clauses to the Bill as we seek to cut some of the loopholes the Government have introduced, which I will turn to in a moment.

Let us not forget that, while cost of living pressures on people across the country have soared relentlessly, oil and gas producers’ profits have climbed too, with some tripling this year. A fair solution has been staring the Government in the face: levy a one-off windfall tax on North sea oil and gas producers’ profits and use that money to help to cut people’s energy bills at home.

Yet when, on 9 January this year, the shadow Chancellor first called on the Government to levy just such a tax, Conservative MPs opposed it outright. Leading that opposition the very next day was the then Education Secretary, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi). He is now of course the Chancellor, so this is his Bill. At the time of our announcement, the now Chancellor, who was an oil industry executive before becoming an MP, came out firmly against the tax on the grounds that oil producers were “already struggling”. When she responds, I would be grateful if the Financial Secretary to the Treasury confirmed whether the Chancellor supports his own legislation today.

Back in January, of course, it was not only the now Chancellor who opposed the tax. The Business Secretary opposed it too, saying:

“I have never been a supporter of windfall taxes.”

The then Northern Ireland Secretary, the right hon. Member for Great Yarmouth (Brandon Lewis), said that he thought a windfall tax sounded attractive, but did not work. The Deputy Prime Minister claimed it would be disastrous. Ministers and their Back-Bench Conservative colleagues then went on to vote against our plan for a windfall tax on three separate occasions.

--- Later in debate ---

[Alan Brown]

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.

[James Murray]

I thank the hon. Gentleman for his intervention. We discuss many matters with Tax Justice UK, not least its response to the ridiculously short consultation period on the draft of the Bill that the Government are now seeking to rush through Parliament in a day.

Despite the fact that Ministers may be in a rush today, we know that their story until recently has been one of delay. Those months of delay in backing a windfall tax mean that the public finances have missed out on billions of pounds of tax revenue that could have gone towards further help for people struggling with the cost of living. But whatever it took to get the Prime Minister and the former Chancellor over the line, we were relieved that they finally agreed to back a windfall tax. On behalf of the people we represent across the country, we were relieved that some help with soaring energy bills was finally on its way. That help is set to include a payment of £400 to all domestic energy bill payers. We welcomed that promise of support announced alongside the windfall tax, and we were relieved that the Government had finally listened to what we and so many others had been saying as they agreed to drop the “buy now, pay later” compulsory loan scheme that had been promised before. But we were dismayed to learn that some of the people who need the help least will be getting that £400 payment several times over. Because this package has been cobbled together at the last minute, people who live in more than one home will get £400 for each of them, so a total of £200 million of public money will go towards people with multiple properties. That is not fair, it is not a good use of public money, and, as we see far too often, it is public money being casually wasted by this Government.

While that particular loophole may have been the result of carelessness or haste, the Bill contains another loophole that has been created by design—a brand-new tax break for oil and gas producers that will give money back to the same firms that were supposed to be paying their fair share through the windfall tax. This tax break means that oil and gas producers will receive an unprecedented level of subsidy for their spending on oil and gas-related activities. For every £100 an oil and gas producer invests in the North sea, they will receive £91.25 from the taxpayer. That compares with £25 that companies receive for investing in renewable energy—a figure that will fall to just £4.50 from April 2023.

--- Later in debate ---

[Abena Oppong-Asare]

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.

[Alan Brown]

Will the hon. Lady give way?

[Abena Oppong-Asare]

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.

[The Financial Secretary to the Treasury (Lucy Frazer)]

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.

[Alan Brown]

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?

[Lucy Frazer]

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.

Energy (Oil and Gas) Profits Levy Bill

Alan Brown Excerpts

Committee stage
Monday 11th July 2022 Commons Chamber

Clauses 3 and 4 set out the types of operating and leasing expenditure that are eligible for the investment allowance, and they are modelled on the provisions for the supplementary charge investment allowance. For operating expenditure, the expenditure must have been incurred for one of the listed purposes, such as increasing oil extraction rates or oil reserves, and must be incurred in relation to a qualifying facility or oil well. However, the allowance is not available for routine repair and maintenance. Leasing expenditure must be for leases of at least five years, and must be for mobile production or storage assets such as floating production storage and offloading ships.

[Alan Brown]

The right hon. and learned Lady sent a letter to MPs saying that electrification will be covered in the offsetting, but does she agree that it should really be in the Bill? Ministers and Prime Ministers come and go, as we have seen, so the only way the industry can have full certainty and clarity is to have something in the Bill about electrification, which is the purpose of SNP amendment 9.

--- Later in debate ---

Most importantly—and I really do wish that this Bill had been smothered—what does a tax rate of 65% say about doing business in the UK? Does it say, “Do well, and we may change the tax rate rather quickly on future profits, because you are doing rather too nicely”? My hon. Friend the Member for Waveney (Peter Aldous) made the point on Second Reading that these companies are fleet of foot. They can invest wherever they like. There is plenty of oil and gas around this world that they can go to, but where their investments may not be carried out and administered in such an environmentally positive way as in the UK. There might be very little monitoring of how much methane is being vented off and of the actual working conditions of people working off the coast of Brazil or the coast of Africa. I would rather that that was done in the UK, but that is a wider argument about energy security and why we should be doing things for ourselves.

[Alan Brown]

Is the hon. Member seriously saying that the companies that currently work in the North sea—companies that are environmentally responsible, take workers’ rights very seriously and look after their workers—might just move somewhere else in the world and give up on workers’ rights and the environment? That does not sound like responsible companies, yet that is what he seems to be saying they would do.

[Craig Mackinlay]

I am saying very clearly that big companies can make investments anywhere they please in the world, perhaps with tax regimes that are more suitable to them and where they are not being taxed at 65%. I would rather that they were investing here and staying here than going abroad to invest, with all the potential consequential impacts on the environment and employment. It seems that the hon. Gentleman agrees with me.