A new booklet launched at the Conservative conference by the party’s leader Kemi Badenoch this week wrongly claims that Labour extended the Energy Profits Levy to 2028.
In fact this extension was announced and enacted by a Conservative government. Only the latest extension, to 2030, was made by Labour.
The claim appears in ‘The Right Way’, described by the party as a “major statement of Conservative principles”. It says of the Energy Profits Levy: “Introduced by Conservatives in May 2022 as a temporary 25 per cent levy to sunset at the end of 2025, it was then extended by Labour to 2028, then 2029, then 2030, while its rate rose to 38 per cent.”
The first part of that is accurate. The levy was announced in May 2022 by Boris Johnson’s government as an additional 25% tax on UK oil and gas profits. The government said it would be phased out if oil and gas prices returned “to historically more normal levels”, and also that the law would include a “sunset clause, effective at the end of December 2025” .
But the next change was also made under the Conservatives. In its Autumn Statement in November 2022, Rishi Sunak’s Conservative government announced that it would raise the rate to 35% from 1 January 2023, and said “the levy will remain in place until the end of March 2028”. This became law in 2023.
Then, in the Spring Budget in March 2024, the same Conservative government announced: “The government is extending the Energy Profits Levy (EPL) by an additional year until March 2029, raising £1.5 billion.”
This change does not appear to have become law before the July 2024 election, however, as was reported at the time.
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Then after Labour took office, the Treasury said the rate would increase to 38% from 1 November 2024, and the levy would be “extended to 31 March 2030”. It also abolished the levy’s main 29% investment allowance. HMRC set out the changes in October 2024, and the 2030 extension became law in 2025.
It’s worth noting that these extensions set out the date on which the EPL is due to end, but under the Energy Security Investment Mechanism, the EPL may end earlier if average oil and gas prices both fall below set thresholds for a period of six months.
So of the three extensions mentioned in the booklet, the Conservatives made one, amounting to two years and three months more, and announced another, which does not appear to have been enacted; and Labour made the last.
And while the booklet was right to say that there has been a 13 percentage-point rise in the rate, from 25% to 38%, 10 points came under the Conservatives and three under Labour.
Full Fact has approached the Conservative Party and Ms Badenoch for comment.
