Budget Resolution No. 13: Energy (oil and gas) profits levy (relief for investment expenditure)

What happened: On 6 November 2024, the House of Commons voted on Budget Resolution No. 13, which concerns the energy profits levy and specifically the relief available to oil and gas companies for investment expenditure. The resolution passed by 454 votes to 124, endorsing the government's plan to reduce the investment allowances that allow oil and gas producers to offset their windfall tax liability against new spending on energy infrastructure.

Why it matters: The energy profits levy, commonly known as the windfall tax, is a supplementary charge on the profits of North Sea oil and gas companies introduced in response to elevated energy prices. Investment allowances within the levy previously gave companies substantial tax relief when they spent on new exploration or production. By tightening those allowances, this resolution means oil and gas producers will pay more of the levy rather than reducing their bill through qualifying investment. The practical effect is to increase tax revenues from the sector, with the government directing those funds toward public spending priorities, while critics argue the change reduces the financial incentive to invest in domestic energy production.

The politics: The vote divided almost entirely along party lines. Labour, the Liberal Democrats, Labour and Co-operative, Plaid Cymru, and the Greens all voted in favour, producing the large winning margin. Conservatives, the Scottish National Party, Reform UK, and the Democratic Unionist Party all voted against, though from differing perspectives: Conservatives and Reform argued the change would damage energy investment and energy security, while the SNP expressed concerns about the impact on the Scottish economy and North Sea jobs. There were no notable cross-party rebels on either side. The vote sits within the broader autumn 2024 Budget package, in which the Labour government has sought to raise revenues from the fossil fuel sector while signalling a transition toward clean energy.