North Sea Energy

With permission, I would like to make a statement about this Government’s plans to unleash the North sea’s clean energy future.

For almost half a century, the workers, businesses and communities of the North sea have powered our country and the world. We believe that they can and will continue to do so for the next half a century and beyond, which is why yesterday, we launched a consultation on the steps we are taking to seize the opportunities of the clean energy transition in the North sea. This is about working with businesses, workers and communities to strengthen north-east Scotland’s status as the energy capital of the UK, and it is about showing global leadership as we deliver a well-managed, orderly and prosperous transition.

We know that the North sea is a maturing basin. Oil and gas production has seen a natural decline of 72% between 1999 and 2023, and as a result, the industry has lost around a third of its direct workforce over the past decade. The truth is that sprinting to clean energy is the only way to deliver energy security and good, long-term jobs for the workforce and for communities. At the same time, we know that we need to listen to the science on what is required to keep global warming to 1.5°C. A science-aligned approach to future oil and gas production is the only way to deliver climate security for future generations, so we owe it to the North sea’s workers and communities—who have done so much for our country—to come up with a proper plan for the future. That is what this Government are doing.

First, we are consulting on our manifesto commitment not to issue new licences to explore new fields. While we have always been clear that oil and gas will continue to play an important role for decades to come, the reality is that new licences for oil and gas awarded in the past decade have made only a marginal difference to overall production. To continue granting them would not help our energy security, would not be compatible with our climate commitments, and would not take one penny off bills. As such, we will not award new licences, but we will continue working with the sector to manage existing fields for the entirety of their lifespan. We will also provide the long-term certainty on its fiscal landscape that the sector needs. Yesterday, the Treasury set out plans for a new regime to respond to future spikes in oil and gas prices once the energy profits levy ends in 2030.

The second part of the consultation is about harnessing the North sea’s unique strengths, including its offshore infrastructure, highly skilled engineers and deep supply chains, to make it a global clean energy powerhouse. In just eight months, we have already made significant progress. We have established Great British Energy in Aberdeen, so that it is in the perfect position to drive the roll-out of clean energy projects. We have improved the offshore wind auction, so that later this year there will for the first time be a new clean industry bonus to reward investment in good manufacturing jobs and clean supply chains. We have overseen a record-breaking renewables auction. We have kick-started the UK’s carbon capture and hydrogen industries—the energy sectors of the future—with strong, early investments. Just yesterday, we awarded more than £55 million to the port of Cromarty Firth for upgrades that will support the development of floating offshore wind, creating hundreds of jobs as we ensure Scotland and the UK remain world leaders in this next-generation technology. But that is just the start.

Our clean power action plan will drive £40 billion a year of investment to meet our goal of clean power by 2030. Research shows that jobs in offshore renewable sectors could increase by tens of thousands in that time. We will also make sure workers have the tools they need to take up these new opportunities. Already, we have worked with the Scottish Government and trade bodies to launch a skills passport, making it easier and quicker for oil and gas workers to bring their skills and experience into clean energy jobs. That idea has been stuck in the mud for years. Thankfully, we have made more progress in the past eight months than was made in the previous 14 years combined. At the same time, we are putting clean energy at the heart of our upcoming modern industrial strategy.

We are incredibly fortunate to have the North sea on our doorstep. For decades, the oil and gas buried there have fuelled development and charged our economy, but the North sea’s long-term future lies in its incredible clean energy potential. We know that its stable winds and shallow shelves make it one of the best locations in the world for offshore wind farms. We know that the UK continental shelf alone has enough capacity to store up to 78 billion tonnes of carbon, which is roughly the amount this country has produced since the industrial revolution. With our skilled offshore industry and workforce, we are perfectly placed to seize this natural advantage and get ahead in the global race for new jobs in new industries.

Instead of sticking our head in the sand and avoiding the big decisions, we have set out a plan to deliver the future that the North sea’s workers and communities deserve. It is a plan to co-ordinate the scale-up of clean energy industries, from offshore wind and hydrogen to carbon capture and storage; a plan to give the oil and gas sector the support and clarity it needs to continue operating for decades to come; a plan for energy security and sustainable economic growth; and a plan to keep working with the people who matter most—the North sea’s businesses, workers, communities and trade unions— to take advantage of the tremendous opportunities of the years ahead together. I commend this statement to the House.

I call the shadow Minister.

I thank the Minister for advance sight of her statement.

Another day, another demonstration of this Government’s total ignorance of our oil and gas industry and the north-east of Scotland, their incompetence on the economy and their disregard for the hundreds of thousands of workers in our North sea, as well as their dangerous ineptitude when it comes to our energy security. No other country in the world, especially at a time of heightened global instability and volatility, would actively choose to aggressively and at pace shut down its domestic oil and gas industry, but that is exactly what this Government and in particular this Department, led by the eco-warrior in chief, are doing.

The consultation, announced yesterday, was trumpeted by Government spinners as the beginning of the end of the energy profits levy and a brave new dawn for the North sea. It is complete and utter rubbish. It is a total joke. The energy profits levy is higher now than it was before, because of the decisions of this Labour Government. The investment allowances have almost all been scrapped by this Labour Government. Crucially, the windfall tax is now in place for far longer—until 2030—because of this Labour Government. That is five years away, but the oil and gas industry does not have five years. Investment is drying up, and work is being put on pause. Companies are literally shutting up shop.

The truth is that the high-paid, good, long-term jobs that the Minister speaks of do not yet exist in renewables in the north-east of Scotland. People are leaving in their droves for other countries, such as the USA, Saudi Arabia, the UAE, Qatar and Norway, where the industry does have a future. She says we owe it to the North sea’s workers and communities to come up with a proper plan for their future, but this Government’s plan for the North sea is simply to shut it down. This Government’s plan is a betrayal of those workers. This Government’s plan will devastate the communities of the north-east of Scotland.

The shadow Minister quoted trade union representatives, having not met them or supported them in government. That is always rich. [Interruption.] He says that he did; I stand corrected, although I suspect that he did not do it often. He quoted the general secretary of the GMB, so let me quote him back. The general secretary said:

“Tory ideology has left the UK vulnerable and exposed. Our Government stood by and exported the bulk of the jobs, closed gas storage and failed to invest in new nuclear and skills.”

I thank the shadow Minister for his questions, and I will come to them shortly, but I have to say that this is a fairly familiar story from the Conservative party: no acknowledgment of their failed record on the North sea, no acknowledgment of their having presided over the worst cost of living crisis in a generation, and no answers to the future challenges that our country faces. I remind the hon. Gentleman that it was his party that lost 70,000 North sea jobs in less than a decade. His Government were content for those workers to have to go around the world to find jobs, but this Government want to keep those talents here in the UK, which is why, unlike the last Government, we have a plan.

In my statement, I said that everyone accepts that the North sea is a declining basin. I do not know whether the shadow Minister understands the basic geology, but this is a super-mature basin, and the harder it becomes to drill for oil and gas, the less likely it is that people will be successful. Only one in 10 of the licences that have been offered and granted in recent years have ultimately led to any work.

The hon. Gentleman needs to establish what his party’s view of this agenda is. The hon. Member for West Suffolk (Nick Timothy), who is sitting next to him, had some very peculiar things to say in Westminster Hall yesterday, and it is unclear exactly what their position is. The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) was a Minister for the grid who opposed grid infrastructure, he was a Minister for solar who opposed solar power, and here he is now, the Minister for Aberdeen, campaigning against jobs and investment in his own community.

I call the Chair of the Select Committee.

The Minister was right to remind us that the North sea is a mature basin, she was right to remind us that 70,000 jobs have been lost there in the last 10 years, and she was right to praise the highly skilled engineers who have made such a contribution in the North sea and to the country. She mentioned the skills passport, and said that the Government were making progress with the industry in finding alternatives in the jobs transition. The Select Committee has heard, a number of times, evidence that one of the challenges is the fact that pay in the North sea is significantly higher than pay in equivalent jobs in the renewable sector, and offshore wind in particular. What, at this stage, are the Minister’s thoughts on how we can make pay more attractive for workers moving from oil and gas into renewables?

I thank my hon. Friend for his work on the Select Committee, which is very important. As he knows, for a long time we have been a bit stuck in trying to set up a passport system because of the slightly different skills and qualifications in each industry and the need to bring them together. The Government became involved to try to ensure that we could bridge that gap and enable people to make the transition. Oil and gas workers are highly skilled and greatly in demand, and, as my hon. Friend says, they are paid a good wage. We need to work with the new offshore wind companies; we like to see union recognition, and we like to see good salaries for people doing those jobs as well. There will be other jobs that people can go into. The plan is to help people make the transition rather than leaving them adrift as the last Government did.

I call the Liberal Democrat spokesperson.

I thank the Minister for advance sight of her statement, much of which we can agree with.

The North sea gives the UK the opportunity to become a powerhouse in renewable energy generation, and it is time that we seized it. We urge the Government to make good their commitment to consult on a new regime to boost investment in jobs. We want to ensure that the oil and gas industry is wound down in a way that supports the redeployment of skills and jobs, and provides the right incentives to encourage fossil fuel industries to invest in green technologies. What details can the Minister give us of the support that the Government will provide to upskill and redeploy those who were formerly working in the fossil fuel industry?

We believe that much bolder action is urgently needed to ensure energy security, to cut bills and, with Donald Trump threatening to pull the United States out of the Paris agreement once again, to resume the UK’s global leadership role on climate action, which was abandoned by the previous Conservative Government. We urge this Government to introduce an emergency 10-year plan to insulate homes, starting with free insulation for the most vulnerable residents, and to introduce an energy social tariff to tackle fuel poverty and health inequalities caused by cold, damp homes.

We are deeply concerned about the cost of heating bills following Ofgem’s decision to increase the energy price cap by 6.4% this April—the third increase since October 2024. The Government must decouple electricity prices from the wholesale gas price and toughen up their windfall tax on the profits of oil and gas giants, including by increasing the tax by another two percentage points to a headline rate of 80%. Time and again, we have been disappointed by the decisions that the Government have taken this winter to delay energy bills support for households. For example, the Government’s warm homes scheme, designed to insulate homes, will not benefit households until—

Order. There is always a maximum of two minutes, and you have exceeded it. Please be seated.

I thank the hon. Lady for her remarks. On upskilling and redeploying workers, as I said previously, we are introducing the passporting scheme and making sure that we can break down the barriers that exist in different industries, because the skills and talents of people working in oil and gas can be transferred to renewable energy. We want to make sure that we do that.

The hon. Lady talks about vulnerable residents and the cost of heating, and she is absolutely right to do so. We have all suffered from the huge cost of living crisis caused by Putin’s invasion of Ukraine. We are doing what we can, and 6 million people will now get the £150 warm homes discount this winter, which will help with their energy bills.

The hon. Lady asks about the windfall tax. The clue is in the name: it is a tax on windfall profits. While the oil and gas industry is making windfall profits, there will be a windfall tax; when it is not, there will not be. That is the way the scheme works, but her points on the need to insulate homes—we are working at pace on that—and to support vulnerable people are absolutely right. The basic principle is that we have an energy bill rise driven by fossil fuels, so we must move to home-grown power for our energy security and for long-term bill reductions.

Order. If questions are not kept short, Members will prevent their colleagues from getting in.

I congratulate the Minister on setting out a plan that supports jobs, skills and communities in the face of technological change—unlike the Conservative party, which abandoned wholesale our industrial base in the 1980s. Like the north-east of Scotland, the north-east of England has jobs, skills and opportunities that depend on the energy of the North sea. Kinewell Energy, in my constituency, leads in wind farm design optimisation. Can the Minister confirm that she will work with the Mayor of the North East, Kim McGuiness, to ensure that the north-east of England benefits from the jobs and opportunities of the North sea?

I meet industry representatives all the time, and their response to Kim McGuiness is great. She is such a force of enthusiasm, knowledge and power for her communities, and people engage with her. They like what she says about investing in the north-east, and they are responding to her. She is making a real difference in her community. We are doing all we can, through all kinds of levers that the Government can use, to make sure that the investment in clean energy supports all our communities. My hon. Friend is right to highlight the fact that we need to take advantage of the particular skills of people in the north-east.

I call the Father of the House.