Contribution
Let me first congratulate the hon. Member for Gordon and Buchan (Harriet Cross) on securing this debate. I thank Members from all parts of the House for their contributions so far; I am sure there will be more interventions in the coming 15 minutes. I say to the hon. Member that it is clear how strongly and firmly she seeks to represent her constituents and those of her neighbour, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), as a resident in north-east Scotland. That comes across clearly in the House.
The UK oil and gas industry plays a significant role in our country, just as it has for more than half a century. Alongside its contribution to our energy supply, it has provided more than £400 billion in production taxes since the late 1960s and created thousands of jobs in the hon. Lady’s constituency and in many constituencies in that part of Scotland and across the country.
As we head towards a net zero future, the industry and the region will continue to play a vital role in the energy transition, with which I know the sector is keenly engaged. Between 2018 and 2024, the sector has acted to reduce its emissions by 34%, and we are seeing oil and gas companies make record investments in carbon capture, usage and storage on land and in offshore wind at sea. I agree with the hon. Member for Gordon and Buchan that it is not an either/or; we must have a managed transition in which we do all that we can to protect jobs and industry, and to grow new jobs and industry too. We are all pulling in the same direction; Government and industry are committed to a fair, orderly and prosperous transition for the region, and I am grateful for the opportunity to speak about that today.
The aim of our tax regime for the exploration and production of oil and gas in the North sea is to support investment in this vital resource, while ensuring that the country obtains a fair return in exchange for the use of an important national asset. I am sure the hon. Member for Gordon and Buchan will be very familiar with the tax regime, and I am sure that everyone else in the Chamber is, but let me set it out for the benefit of those who may not be. The regime today includes a ring fence corporation tax that is charged at 30%, the supplementary charge at 10% and, yes, the temporary energy profits levy at 38%. As the hon. Member mentioned, that was introduced amid near-record-high prices following the recovery from covid and Russia’s invasion of Ukraine.
While we pursue our net zero targets, we must ensure that we meet the country’s energy needs. That involves energy from overseas alongside our own new nuclear, wind and solar, and, of course, domestic oil and gas. With domestic gas production, net of imports, accounting for the equivalent of about a third of UK gas demand, our oil and gas industry supports more than 100,000 jobs, and will continue to play a significant role in our energy mix for decades to come. In supporting those jobs and the important contribution of the sector, our approach to taxation is, in my view, both responsible and proportionate. We believe in the ongoing contribution of the oil and gas industry and its skilled workforce, and the sector continues to benefit from £84.25 in tax relief for every £100 of private investment, with more relief available for decarbonisation-based investments.
The oil and gas sector is expected to contribute about £16 billion in tax receipts between this financial year and 2029-30, which is roughly equivalent to the entire year’s NHS Scotland budget. The energy profits levy alone has already raised more than £11 billion since its introduction. Yes, that is less than was forecast at the time, but in a way that should be welcome news for the hon. Member, because it means lower energy bills for people up and down the country who are affected by the cost of living—families in her constituency, and in mine.