Energy (Oil and Gas) Profits — House of Commons, 2022-07-05
Topic: Macroeconomics
Alison Emily Thewliss (Scottish National Party, Centre-left): It is a pleasure to see you in the Chair, Mr Deputy Speaker. What a strange evening for us to be making speeches in the House. While the Minister did a good job of putting forward the policy, we have to ask who the Chancellor will be by the time the Bill comes to the House next week and, indeed, whether it will still stand when it does come The Tories have come here today with a "temporary refund adjustment", an "energy profits levy", a windfall tax by any other name. It is a tax that Tory Members were vehemently against all the way up to the point when the now former Chancellor announced it, yet he still came to the Treasury Committee to tell us that he did not believe in windfall taxes. So I can only speculate that this may be one of the reasons why he chose to resign this evening—one of the areas in which he and the Prime Minister apparently disagreed in private—and one of the reasons why he was no longer prepared to give a speech on the economy with the Prime Minister next week, as planned Today we see the UK Government finally getting round to doing something about these excess profits; as always, at the coo’s tail. They have the full suite of economic powers to act, but they continue, again and again, to lack the will or the imagination to do so—to support people through a cost of living crisis that they helped to create The SNP has been consistent in calling for a windfall tax on excess profits since June 2020, in response to the soaring profits then being made by Amazon and other online retailers during the pandemic. My colleague in the Scottish Parliament and evangelist for Paisley, George Adam MSP, raised that issue and the Scottish Government Finance Secretary Kate Forbes certainly agreed with the principle. It is disappointing that this UK Government, and indeed the official Opposition, have looked only narrowly and in a limited fashion at oil and gas and ignored all the other areas where super-extraordinary profits have been soaring during this pandemic Today we see Scotland’s oil and gas resources being used yet again to bail out the UK Treasury. The Tories have made a very specific choice to focus their raids on super-profits not just on Scotland but on one particular part of Scotland: the north-east. Aberdeen and the towns around it have contributed significantly—over £300 billion—to the UK balance sheet, yet when it comes to carbon capture and storage or the Scottish cluster, that area is left on the subs bench, waiting on a list instead of leading a just transition. The UK Government will not even match the Scottish Government’s commitment to the just transition fund I have listened carefully to those in the oil and gas industry, and the lack of predictability and consistency in the taxation regime comes up again and again. When the industry expert Nathan Piper gave evidence to the Treasury Committee back in March, he spoke powerfully about the impact this has on confidence and investment. Yes, we know that oil and gas can be volatile, but when we look just across the water to Norway, we see a reliable stewardship of resources and the world’s largest sovereign wealth fund. Scotland, look at what you could have won, had it not been for the squandering and mismanagement of our natural resources by each and every UK Government since the first drop of oil was extracted. Schrödinger’s Scotland: a country too poor to be independent but simultaneously so rich that the UK Government can use Scotland’s North sea as a £5 billion cash machine In the early years of North sea oil and gas, revenues were used to pay for Thatcher’s mass unemployment. Gordon Brown’s raid in the early 2000s was used to pay for cuts to fuel duty, and the current Tory Government are now zoning in on oil and gas to tackle their own Brexit cost of living crisis when other options are available to them. This comes at a time when the Treasury is raking it in from additional tax receipts from the soaring prices of fuel, energy and goods, giving the former Chancellor an extra £30 billion of fiscal headroom in his budget What of the environment and the promises made at COP26? The new investment allowance is, in the Treasury’s own words, an "incentive for the oil and gas sector to invest in UK extraction" It is as though the Treasury has forgotten that COP26 happened at all. This is clearly contrary to the Scottish and UK Governments’ climate objectives and to the commitments they made to the world last November. The UK Committee on Climate Change has stated: "An end to UK exploration would send a clear signal to investors and consumers that the UK is committed to the 1.5°C global temperature goal." Where stands that commitment now? We on the SNP Benches welcome investment, but any incentives must be balanced across sectors and encourage sustainable investment towards a just transition and into renewables, rather than the short-term, carbon heavy investment that the former Chancellor was encouraging. We also know that any investments from this are unlikely to have an impact on our household energy bills anytime soon, but that is where this crisis lies A further source of worry to those not in the oil and gas sector is the now former Chancellor’s plans for a further raid on other energy producers, putting at risk Scotland’s key renewables sector. The former Chancellor refused to tell me in the Treasury Committee whether he had even picked up the phone to the Scottish Government to discuss these plans with them. He talked about extraordinary profits, but could not define what they were and who was making them. The Secretary of State for Business, Energy and Industrial Strategy seems to know little of the plans, passing the buck back to the Treasury. All of this is undermining confidence in a sector that could not be more crucial to the future of our planet What happens now? When will we hear further details of those plans? The Chancellor claimed a month ago that it would be in "weeks". Will the plans for other energy producers come forward before the recess? Will the Minister put a date on it? Will there be more tax breaks for renewable development, or is it only oil and gas exploration that get the tax breaks? Will these measures be spliced into the Bill next week? Will we even see a Bill next week? This is more short-termism, more inconsistency and more poor stewardship of Scotland’s resources by a Government we did not elect. Scotland is a renewables powerhouse, and we on these Benches will resist any attempt to stifle that industry and to raid the profits. It used to be said that it is Scotland’s oil. We can now say that it is Scotland’s wind, Scotland’s waves, Scotland’s tides, Scotland’s solar and Scotland’s hydrogen. Westminster lies in chaos. It is Scotland’s opportunity on 19 October 2023. Let us put the power in our own hands.