Energy Profits Levy

Treasury – in the House of Commons at on 15 November 2022.

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Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party, Belfast South

Whether he plans to review the surcharge rate of the energy profits levy.

Photo of James Cartlidge James Cartlidge The Exchequer Secretary

The energy profits levy was introduced from 26 May in response to sharp increases in oil and gas prices and to help fund cost of living support for UK households. It is an additional 25% surcharge on UK oil and gas profits. The Government have calculated that they expect the levy to raise more than £7 billion this financial year. All taxes are kept under review at all times.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party, Belfast South

Households and businesses are being crippled by energy costs, with support non-existent in the case of the Northern Ireland energy scheme. At the same time, Shell has reported quarterly profits of £8.2 billion and BP of more than £7 billion, but, under current rules, Shell is not expected to pay any windfall taxes in this year. It is encouraging that there is word that the Government are intending to extend the scope of the windfall tax, and it is not before time. Undoubtedly, there are difficult financial decisions to be taken, but this is not one of them. When even Shell is saying that this tax should be embraced, we know that the policy is in the wrong place. Will the Chancellor commit to increasing the scope of the levy and to closing loopholes on timing, share buybacks and the investment allowances that allow tax to be avoided by diverting profit into polluting and unsustainable fuels?

Photo of James Cartlidge James Cartlidge The Exchequer Secretary

To be clear, the levy is an additional 25% surcharge on UK oil and gas profits on top of the existing 40% headline rate of tax, taking the combined rate of tax on those profits to 65%. The hon. Lady is right that the levy contributes to the support that will be going out to Northern Ireland; it will come in a month later, but will be backdated to 1 October, and it will include businesses as well as households.