United Kingdom Subsidies

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United Kingdom–6 billion GBP every year

Fossil fuel subsidies are a contentious issue for the UK. Over the past 5 years, The UK has become the only G7 nation to increase its’ support for the production of fossil fuels—despite earlier pledges to phase them out entirely— and it is now the fifth largest global subsidizer with an estimated £6 billion given in subsidies to the fossil fuel industry every year. Most of this is in the form of tax breaks to help boost declining North Sea oil production (which has included figures such as £551 million being given to the Total, £131 million to Apache and £267 million to Statoil). In addition, in 2016 the UK introduced a new North Sea tax break which is estimated to be worth an additional £1.7 billion over the next five years.

This runs contrary to declarations made by the government itself. For example, then-Prime Minister David Cameron told a UN climate-change conference in September 2014 that ‘we need to give business the certainty it needs to invest in low carbon. That means fighting against the economically and environmentally perverse fossil-fuel subsidies’. Government departments have gone further—using a different, stricter definition of ‘subsidy’ to involve only ‘government action that lowers the pre-tax price to consumers to below international-market levels’ to argue that the UK does not actually provide any fossil fuel subsidies at all. This is because reducing the usual rate of tax paid in a certain sector (which is the form of subsidy the UK government favors, and which is at a rate that is still higher than the ‘normal’ rate other sectors pay) would not fit within this definition.

The UK government’s use of fossil fuel subsidies does not look to be abating any time soon, and recent cuts to offshore wind and solar subsidies appears only to reinforce this.