15:00 James Murray (Labour)

Let me turn to clause 2 and schedule 1. The Bill will simplify research and development rules by merging the small and medium-sized enterprises and the R&D expenditure credit schemes. Whether it is trialling and distributing the successful covid vaccines, which helped us defeat covid-19, or testing and developing new innovations that will enable us to meet our net zero targets, R&D businesses play a vital role in growing our economy. At the spring Budget 2023, my right hon. Friend the Chancellor announced enhanced support for R&D-intensive SMEs worth around £500 million per year, a consultation on the potential merged R&D tax relief scheme and support for those loss-making R&D businesses. As a result, the measures in this Bill show the Government’s unwavering support for R&D businesses.

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17:15 The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)

The Government have said that their April 2022 tax changes were intended to reduce the use of gas fuels and to make progress against the UK’s climate commitments. However, perversely, under the current system companies receive a tax penalty for using next-generation renewable fuels such as hydrotreated vegetable oil for heating, instead of kerosene, despite the fact that HVO produces nearly 90% less greenhouse gas emissions. I therefore support clause 25, which seeks to correct that unintended error and restore equivalent tax treatment for the use of non-gas heavy fuels for commercial heating. However, let us be clear: the correction will have a limited impact on businesses across the UK facing rocketing heating bills as the cold starts to bite this winter.

Labour will prioritise reforming the grid, overseeing the largest upgrade to our national transmission infrastructure in a generation and accelerating connections for those who are forced off grid. We cannot afford to keep dragging our feet any longer. The Government claim they are serious about delivering the transition and boosting the use of clean energy sources, but the neglect of our grid infrastructure has been shocking. We know that the significant increase in both clean power generation and clean industry that the UK will need to reach net zero will require four times as much grid infrastructure in the next seven years as has been built in the past 30. Although the Opposition do not oppose clause 25, which is a welcome correction, ensuring that tax incentives for non-gas heavy fuels remain consistent is the bare minimum we should be expecting from the Government on this vital issue.

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