Finance Bill Report Stage: New Clause 2

What happened: On 3 March 2025, the House of Commons voted on New Clause 2 during the Report Stage of the Finance Bill. The clause, tabled by Conservative MPs, would have required the Chancellor of the Exchequer to commission and publish an assessment of the expected impact of increases to the Energy (Oil and Gas) Profits Levy on domestic energy production, energy security, energy prices and the wider UK economy. The amendment was defeated by 331 votes to 113.

Why it matters: The Finance Bill implements the October 2024 Budget, including raising the Energy Profits Levy from 35% to 38%, extending it by one year and removing investment allowances, bringing the headline tax rate on North Sea oil and gas activities to 78%. New Clause 2 did not seek to reverse those changes but would have required a formal government assessment of their consequences within six months of the Act coming into force. Opponents of the levy changes argue that the increases risk choking off investment in domestic energy production, threatening tens of thousands of jobs and undermining the UK's energy security, particularly at a time of global geopolitical uncertainty. Supporters of the government's position argue the levy raises necessary revenue and that high tax rates on oil and gas profits are compatible with maintaining a productive energy sector, pointing to Norway as an example.

The politics: The vote divided almost entirely along government-versus-opposition lines. All 323 Labour and Labour and Co-operative MPs present voted against the amendment, while Conservatives (93 votes), the SNP (7), Plaid Cymru (4), Reform UK (4), the DUP (3) and the Traditional Unionist Voice (1) voted in favour, alongside two independents. The Green Party sided with the government, casting 4 votes against the clause. There were no notable cross-party rebels on either side. The result reflects the government's comfortable Commons majority. The Finance Bill debate also covered a range of related contested measures including the VAT treatment of private school fees, the national insurance contributions increase, state pension income tax thresholds and the impact on small businesses, all of which have been points of sustained Conservative and Liberal Democrat attack since the Budget was delivered in October 2024.