Taxation (Energy and Vehicles) Bill
House of Commons · Commons Chamber · 1 Jul 2026 · 47 speeches · Official Report
Considered in Committee (Order, this day)
[Judith Cummins in the Chair ]
Clause 1
Increase in rate of electricity generator levy
Question proposed, That the clause stand part of the Bill.
With this it will be convenient to discuss the following: Clauses 2 to 4 stand part. New clause 2- Approved mileage allowance payments: review of rate for care workers- “(1) Within six months of the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a review of the adequacy of the approved mileage allowance payment rate set under section 2 in respect of care workers using a personal vehicle in connection with their employment. (2) The review under subsection (1) must consider- (a) whether the rate of 55 pence per mile adequately reflects the costs incurred by paid care workers when travelling between the homes of those for whom they provide care; (b) the merits of setting a higher approved rate for paid care workers who are required to transport specialist equipment, medication or mobility aids in connection with their caring responsibilities; (c) the merits of setting a higher approved rate for paid care workers who make three or more separate care visits in a single day; and (d) the interaction between mileage reimbursement practices in the social care sector and the effective hourly rate received by paid care workers relative to the National Living Wage. (3) In preparing the review under subsection (1), the Chancellor of the Exchequer must consult- (a) representatives of paid care workers; (b) representatives of employers in the social care sector; and (c) such other persons as the Chancellor considers appropriate. (4) In this...
I will open this debate in Committee of the whole House by reminding the House-though I am sure Members know what is in this Bill-of the purpose of the Bill, which is to respond to increases in costs for families and businesses in the UK because of the conflict in the middle east. Even though we have just completed Second Reading, as we are now in Committee, I will address the clauses of the Bill in turn-Members will be relieved to know that there are only four clauses, so it should not take too long. I will address the amendments that have been tabled in my closing speech, which, with the leave of the House, I intend to make. Clause 1 makes changes to ensure that the electricity generator levy rate will rise from 45% to 55% from today, 1 July. As my hon. Friend the Economic Secretary to the Treasury set out, in the UK the majority of our electricity is generated from renewables. Despite that, when the crisis in the middle east pushed up international gas prices, the cost of electricity, and so the cost of living, rose too, because electricity prices are still largely set by the price of gas. The changes made by this clause will ensure that a greater proportion of any exceptional revenue that many non-gas generators may receive because of the conflict in the middle east is available to Government to support businesses and households where appropriate. As we have discussed, the Government also announced back in April that we are acting to de-link electricity prices from gas...
I call the shadow Minister.
I will be speaking primarily to new clauses 4 and 5 tabled in my name and those of my hon. Friends, specifically related to the electricity generator levy and the HGV vehicle excise duty holiday. I have to say to the Exchequer Secretary that it is quite nice to see a Treasury Bill that is so concise, rather than the hundreds of pages that we see in every Finance Bill, adding complexity and costs for businesses. I hope that he will take that point back to the Treasury when he returns with the next Finance Bill. I think he has also given a commitment, or expressed an ambition: he said he likes to scrap taxes, so I hope that we will see more taxes scrapped. Now we turn to one that he is increasing, rather than introducing. 3.15 pm New clause 4 would require the Treasury to review the impact of increasing the generator levy to 55% and to report on its findings to Parliament before 31 March 2028. Importantly, the review should also consider whether the levy should continue to be charged at a rate of 55%. Due to the resolutions passed by the House, it is not possible to seek to amend the Bill to put a levy end date on the face of the Bill, so this is a modest amendment, but it is an important one because it goes to the heart of whether this Government have thought through the consequences of their approach. The levy was originally introduced as a temporary windfall tax, designed to capture exceptional receipts in extraordinary market conditions. The Government are now proposing to...
I call the Liberal Democrat spokesperson.
I rise to speak to new clauses 1 to 3. New clause 1 would require the Chancellor to publish a report on the use of additional receipts arising from the increase in the electricity generator levy from 45% to 55%. New clause 2 would require the Chancellor to review the adequacy of the approved mileage allowance payment rate set under clause 2 in respect of care workers using a personal vehicle in connection with their employment. New clause 3 would require the Chancellor to publish an assessment of the combined impact on haulage costs and consumer prices of the temporary vehicle excise duty rates for goods vehicles. As I indicated on Second Reading, we support what the Government are trying to do with these measures. However, it is really important for trust in politics that when Ministers stand at the Dispatch Box and say that the intention is to use the levy to supporting households and businesses with the cost of living, there is a report to demonstrate to the public that the money does, in fact, go towards measures that do just that, rather than the money disappearing into Treasury coffers. I urge the Exchequer Secretary to accept new clause 1, which would provide transparency to Parliament and the public. Let me turn to new clause 2. Some Members will know that I have spoken repeatedly in this House about the extraordinary work carried out by our care workers. The salary of our care workers, and the status they are given, is nowhere near big enough to recognise the...
I thank the shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), and the hon. Member for St Albans (Daisy Cooper), for their scrutiny and attention to the measures contained in this short Bill. I am proud that, as the shadow Exchequer Secretary said, we removed three taxes, and I am glad to say that, on a temporary basis at least, one tax is being put down to £1 as a result of the legislative changes that the House is about to vote on. It is a privilege to close this brief debate on behalf of the Government. Let me turn to each amendment. New clause 2 would require a report to the House of Commons on the approved mileage allowance payments system, including the adequacy of the rate for care workers. The hon. Member for St Albans spoke powerfully about the work done by care workers in her constituency, who she has the honour of representing. I think that all Members will know-from personal experience of family members who have either worked in the sector or been cared for by those who work in the sector-just how valuable care workers’ time, effort and care is. I am glad that the hon. Lady is now aware that care workers can claim back the tax. They cannot claim back the whole amount-it is not fully equivalent-but they can claim back the tax relief, as it were, on the amount. I want to look at whether we can make that process simpler and easier to use. As the Department does so, I would be happy to provide further updates-if not at the Budget, then...
The shadow Exchequer Secretary seemed to suggest that the Opposition’s view is that we should not have introduced this change until wholesale contracts for difference have been consulted on and sorted out. The Opposition would choose to forgo the additional revenue that may come in if prices remain higher than the threshold in the coming years; the Government’s view is that that is not the right approach.
I am happy to clarify that for the Minister. My point was rather that if the Government are to introduce a higher levy rate on the basis that it will incentivise people to move into wholesale contracts for difference, it might be as well to have the policy for those wholesale contracts for difference ready.
I thank the shadow Exchequer Secretary for that. As I said, we are consulting on that policy before the end of the year. It was the Chancellor’s and this Government’s decision that the better thing to do for the country-for businesses and for households-was to respond to the conflict in the middle east with pace and appropriate responsiveness rather than waiting until the next fiscal event, which is scheduled for the autumn. I turn to new clause 5, which would require a report to the House of Commons on the impact of the measure on UK public finances, the competitiveness of the UK freight and logistics sector and the contribution of the temporary VED rate to efficient supply chains, and whether the measure remains appropriate beyond the next 12 months. As always, taxes and reliefs will be looked at ahead of the next fiscal event in the context of the public finances. Consistent with the Chancellor’s approach, this is a targeted and time-limited intervention in response to the conflict in the middle east, in recognition of the key role that the road haulage sector plays in transporting goods-including food-across the UK and its disproportionate exposure to fuel costs. The Government will continue to monitor the situation and consider further action as and if that may be necessary. As on other measures, the Government have already published a tax impact and information note, and the costing for the measure will be subject to scrutiny by the Office for Budget Responsibility....
New Clause 4
Electricity Generator Levy: Review of Rate
“(1) The Treasury must review the impact of the increase in the Electricity Generator Levy rate to 55% under section 1.
(2) The report must, in particular, assess-
(a) the impact of that rate on investment in energy generation;
(b) the effects of that rate on electricity prices, including consumer bills;
(c) the implications of that rate for the security of energy supply; and
(d) whether the Levy should continue to be charged at a rate of 55%.
(3) The Chancellor of the Exchequer must lay the report containing the findings of the review before Parliament before 31 March 2028.” -(James Wild.)
Brought up , and read the First time.
Question put, That the clause be read a Second time.
New Clause 5
Goods vehicle excise duty (VED) rates: review
“(1) The Treasury must review the impact of the temporary vehicle excise duty (VED) rates for goods vehicles provided for under section 3.
(2) The report must, in particular, assess-
(a) the impact of the temporary VED rates on-
(i) UK public finances, and
(ii) the competitiveness of the UK freight and logistics sector;
(b) the effects of the temporary VED rates on operating costs for goods vehicle operators;
(c) the contribution of the temporary VED rates to efficient supply chains across the United Kingdom; and
(d) whether it remains appropriate for the temporary VED rates on goods vehicles to continue.
(3) The Chancellor of the Exchequer must lay a report of the review before Parliament before 30 June 2027.” -(James Wild.)
This new clause would require the Treasury to review the impact of temporary vehicle excise duty rates for goods vehicles and to report to Parliament by 30 June 2027.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The Deputy Speaker resumed the Chair .
Bill, not amended, reported.
Third Reading
I beg to move, That the Bill be now read the Third time. I am grateful for the discussion that we have had today on a Bill that responds directly to the pressures placed on people and businesses across the UK by the conflict in the middle east. In respect of energy, rising gas prices have driven up electricity prices, and non-gas generators stand to benefit significantly as a result. The electricity generator levy ensures that a share of this exceptional revenue is redirected to the public, and we are increasing that share by raising the rate of the levy from 45% to 55%. As for fuel costs, we are uprating mileage rates for the first time in 15 years, providing relief for millions. We are also introducing a 12-month vehicle excise duty holiday for the majority of heavy goods vehicles, supporting those who drive for work and the transport of goods across the UK. Those three measures are the right measures at the right time, and I commend the Bill to the House.
This has indeed been fast-tracked legislation, at 90 minutes-no need for extra time here. [Laughter.] There is more. The Government have sought to move rapidly to impose a higher levy on generators, but the measures designed to decouple electricity and gas prices have not been given the same priority. Motorists using their cars for work will welcome the increased mileage rates, but those driving more than 10,000 miles a year will be puzzled that those rates remain unchanged. Reducing the costs on those who keep goods moving around our country will make a difference, but that has to be seen as only part of the ledger and set against higher employment and higher taxes. I congratulate the Minister on so ably shepherding the Bill through this afternoon. I am sure that he will have many more Bills to take through as the Exchequer Secretary to the Treasury, but this may well be the last piece of legislation to be granted Royal Assent before the Prime Minister shuffles off the stage. For this Bill and this Prime Minister, they think it’s all over-it is now.
We Liberal Democrats support the Bill and the three measures in it. We tabled our three new clauses in Committee, and I was grateful that the Minister gave assurances from the Dispatch Box that he would look at every single opportunity to ensure that care workers are aware of the ways in which they can benefit from these measures. We are happy to see the Bill fast-tracked, but I believe the Minister said that he would look for opportunities to come back and report to this House-if not at the Budget, perhaps before-on how that is going. I am glad that is on the record. I hope that care agencies see that on the record and act on it to inform their staff, but I was pleased to hear the Minister say that. I will try to hold his feet to the fire so that we do everything we can to ensure that care workers are aware that they will benefit from this measure.
I ask that the House gives the Bill its Third Reading. Question put and agreed to. Bill accordingly read the Third time and passed.