Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the likelihood of North Sea Oil and Gas companies front-loading investment in new oil and gas extraction over the next three years in order to benefit from additional tax relief under the Energy Profits Levy; and if he will make a statement.
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%, effective from 1 January 2023. The levy has also been extended until 31 March 2028.
The Government has been clear it wants to see the oil and gas sector reinvest its profits to support the economy, jobs and the UK’s energy security. That is why, from 1 January 2023, the Government will maintain the existing cash value of the levy’s investment allowance for most types of investment expenditure, ensuring that for every £1 an oil and gas company invests, they will continue being able to claim around 91p in tax relief.
For expenditure in upstream decarbonisation, the allowance will remain at 80%, meaning for every £100 an oil and gas company invests to decarbonise oil and gas production, they will be able to deduct £109.25 when calculating their levy profits. This provides an immediate and significant fiscal incentive to reinvest profits in the UK.
Since the levy is targeted at the extraordinary profits from oil and gas upstream activities, any relief for investment must also be related to oil and gas upstream activities. Therefore, tax relief is only available in relation to expenditure incurred for activity that is charged under the oil and gas ring fence corporation tax regime. For other investments, such as renewables, companies will be able to deduct investment costs from their corporation tax.
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.
Oil and gas producers are commercial entities and the Government does not comment on individual taxpayers.
The Autumn Statement also confirmed the Government will engage stakeholders as part of a review to consider the UK’s long-term tax treatment of the North Sea after the Energy Profits Levy ceases in March 2028. Further details will be announced in due course.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent estimate he has made of (a) how much oil and gas companies will spend on upstream decarbonisation and (b) by how much the investment allowance for decarbonisation for oil and gas companies will reduce total North Sea revenues in each financial year from 2022-23 to 2027-28.
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%, effective from 1 January 2023. The levy has also been extended until 31 March 2028.
The Government has been clear it wants to see the oil and gas sector reinvest its profits to support the economy, jobs and the UK’s energy security. That is why, from 1 January 2023, the Government will maintain the existing cash value of the levy’s investment allowance for most types of investment expenditure, ensuring that for every £1 an oil and gas company invests, they will continue being able to claim around 91p in tax relief.
For expenditure in upstream decarbonisation, the allowance will remain at 80%, meaning for every £100 an oil and gas company invests to decarbonise oil and gas production, they will be able to deduct £109.25 when calculating their levy profits. This provides an immediate and significant fiscal incentive to reinvest profits in the UK.
Since the levy is targeted at the extraordinary profits from oil and gas upstream activities, any relief for investment must also be related to oil and gas upstream activities. Therefore, tax relief is only available in relation to expenditure incurred for activity that is charged under the oil and gas ring fence corporation tax regime. For other investments, such as renewables, companies will be able to deduct investment costs from their corporation tax.
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.
Oil and gas producers are commercial entities and the Government does not comment on individual taxpayers.
The Autumn Statement also confirmed the Government will engage stakeholders as part of a review to consider the UK’s long-term tax treatment of the North Sea after the Energy Profits Levy ceases in March 2028. Further details will be announced in due course.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to his commitment in the Autumn Statement 2022 to review retained EU law in key growth industries, if he would (a) define the term green industries and (b) set out a timetable and terms of reference for this review.
Answered by James Cartlidge - Minister of State (Ministry of Defence)
At the Autumn Statement, to help remove barriers to growth, the Government committed to move rapidly to review retained EU law in named key growth industries, including green. Green industries are central to delivering on our climate and environmental ambitions. Unlocking growth in these industries will establish the UK as a global leader in the technologies required to tackle climate change and reverse the decline in our natural environment. The Government committed to identify changes that can be made over the next year. More information will be published in due course.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has made an estimate of the amount that would be raised by the Energy Profits Levy over the next six years if tax relief is not provided to companies which invest in new oil and gas extraction in the UK.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
We estimate that the EPL will raise about £40 billion over the next 6 years, allowing for tax reliefs.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of anti-trust and competition legislation on the work of the Glasgow Financial Alliance for Net Zero to limit investment in fossil fuels; and if he will take steps to help ensure that (a) anti-trust and competition and (b) other legislation does not prevent divestment from fossil fuels by the Glasgow Financial Alliance for Net Zero; and if he will make a statement.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The UK COP26 Presidency and UN Race to Zero Campaign launched the Glasgow Financial Alliance for Net Zero (GFANZ) to unite firms from the leading net zero initiatives across the global financial system to accelerate the transition to net zero emissions. It is now a fully independent organisation representing its members and is coordinated by a dedicated secretariat.
To support companies to adapt as the world transitions towards a low carbon economy we also launched the Transition Plan Taskforce (TPT) in May. This brings together the best of British industry and academia with regulators and the third sector to develop a ‘gold standard’ for transition plans. The Government does not advocate divestment strategies believing transition plans have more impact.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy to (a) bring forward the local government finance settlement to the same date as the Autumn Statement and (b) to increase the local government settlement in line with inflation or above; whether he has had discussions with the (i) the Prime Minister and (ii) Secretary of State for Communities and Levelling Up about the ability of local authority leaders to (A) plan for and (B) provide public services without this information and funding; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The timing of the Local Government Finance Settlement is a matter for the Department for Levelling Up, Housing and Communities.
The Government recognises the pressures that local authorities are facing and continues to work with the sector to understand the impacts on service delivery and budgets.
The Department for Levelling Up, Housing and Communities will confirm the approach to funding allocations for 2023-24 in the upcoming Local Government Finance Settlement.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will publish an equalities impact of the Autumn Spending Review along with the other official documents published on the day of the review.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In developing proposals at fiscal events, including previous and forthcoming events, such as the Autumn Budget planned for 17 November, the Treasury takes care to ensure compliance with legal requirements under the Public Sector Equality Duty (PSED) in the Equality Act 2010 to consider the impact of its decisions on those sharing protected characteristics.
This is in line with both our legal obligations to pay “due regard” to equality impacts and with our strong commitment to promoting fairness.
In the interests of transparency and going beyond legal requirements, HMRC publishes a summary of equality impacts for tax measures within the Tax Information and Impact Notes (TIINs) alongside the associated legislation.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he will publish HMRC assessments for all of the new tax measures he set out on 23 September 2022, including those which will take effect in future tax years.
Answered by Richard Fuller
HMRC publishes a summary of impact assessments for tax measures within Tax Information and Impact Notes (TIINs), which provide a clear statement of the policy objective, impact on the Exchequer, the economy, individuals, businesses and civil society organisations, as well as any equality and other specific impacts.
The TIINs for tax measures will be published when the associated legislation is introduced.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of whether (a) food packaging producers, (b) food manufacturers and (c) food and drink retailers have passed on the costs of the plastic packaging tax to consumers; and if he will make a statement.
Answered by Felicity Buchan - Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)
The Plastic Packaging Tax was introduced on 1 April 2022 to tackle the pressing global issue of plastic waste. The tax applies to importers and manufacturers of plastic packaging and provides an economic incentive to use more recycled plastic in packaging.
If businesses that are liable for the tax choose to pass the cost down to consumers, the Government expects the impact of the tax on consumer prices to be small as plastic packaging typically makes up a very small amount of the total cost of goods.
Further details on the impact of the tax have been published in a Tax Information and Impact Note: www.gov.uk/government/publications/introduction-of-plastic-packaging-tax-from-april-2022/introduction-of-plastic-packaging-tax-2021(opens in a new tab)
All taxes are kept under review.
Asked by: Caroline Lucas (Green Party - Brighton, Pavilion)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if his Department will make an assessment of the potential effect of allowing investment expenditure under the Energy (Oil and Gas) Profits Levy Act 2022 as a subsidy, under the provisions of the Subsidy Control Act 2022, on (a) the levels of future oil and gas production and (b) tax revenues.
Answered by Felicity Buchan - Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)
The Government does not consider the Energy Profit Levy’s investment allowance for investment expenditure to be a subsidy under the Subsidy Control Act 2022.