My Lords, without, I hope, taking away too much tension from the Committee, I am not going to press this amendment so I shall be relatively brief in explaining it. It has an important basis in the Government’s Energy (Oil and Gas) Profits Levy Act. It also has an element of looking at how the Bill and previous schemes discriminate against the renewables industry compared with fossil fuels.
A key element of Amendment 13 is to assess the impact of that date in the levy so that it applies to oil and gas profits incurred since 1 October 2021. The Government’s energy profits levy is effective from 26 May, meaning that profits accrued before that date are outside its scope. It was clear over a year ago that surging profits for the oil and gas companies were in stark contrast to the real struggle faced by ordinary people and small businesses faced with high and soaring energy costs. In fact, it was one year ago today that my right honourable friend Ed Davey MP called for the windfall tax on the profits of oil and gas companies, accompanied in due course by other parties and other parties represented in this House.
If the Chancellor had responded at that time and a levy had been in place from October, it would have raised billions more. If I could just remind the Committee of the profits since then, BP saw profits rise by 138% between quarter 1 of 2021 and quarter 1 of 2022—from £2.6 billion to £6.2 billion; it was similar for Shell. These combined super-profits alone amount to £7.5 billion in the first quarter of 2022. That is £7.5 billion more than they made in the same quarter in 2021. Had those windfall profits had been taxed by the same amount, it would have raised £1.8 billion.
What we are looking for in particular here has to do with the levy. Like proposed new subsection (1) in Labour’s Amendment 14, proposed new subsection (1)(b) in Amendment 13 calls from the removal of allowances in the levy for investment in oil and gas extraction.
This is one of the key differences between the revenue cap on renewables and the fossil fuel industry, where there is that huge investment incentive of getting 80% back for investment in—dare I say?—fossil fuels, obviously. That is where we want there to be quality.
We on these Benches know, as do Members from other parts of the House, that renewables, rather than fossil fuels, are really the way forward. The Government have committed themselves to a large amount of investment in offshore wind. We recognise that but we need to keep at least a level playing field in taxation matters between renewables and fossil fuels. I very much believe that we need then to push investment in renewables further forward. I beg to move.