SCOTS NATIONALISM

Labour risks killing off the goose that lays the black-gold egg - Erikka Askeland

It’s just as well Scottish Labour is holding its conference in Glasgow this weekend because they would likely be run out of town if it had been in Aberdeen.

 Business

By Erikka Askeland

Published 17th Feb 2024,

Business leaders in Scotland’s north-east are on the warpath after Labour leader and aspiring Prime Minister Keir Starmer set his sights on the oil and gas industry.

Following an embarrassing U-turn on proposals to invest £28 billion in green energy projects, UK Labour now plans to squeeze companies in the North Sea by extending and increasing the so-called windfall tax to fund its reduced green ambitions.

The move caused Aberdeen and Grampian Chamber of Commerce (AGCC) to cry havoc – accusing Starmer, along with Scottish Labour leader Anas Sarwar and shadow net-zero minister Ed Miliband, of betrayal.

AGCC policy director Ryan Crighton said the Labour trio had a few months ago come to Aberdeen “looked us in the eye and told us they wanted to work with the energy industry to deliver a transition that leaves nobody behind”, promising there would be “no cliff-edge end” to the North Sea industry – and labelled the tax call as a betrayal of this pledge.

Labour expects to raise £11bn from oil and gas firms to fund an £8.3bn “GB energy” company, a £7.3bn national wealth fund to invest in decarbonising industry and to spend £1.3bn (down from an initial £6bn) to insulate the UK’s stock of leaky, gas-heated homes.

But an analysis from investment bank Stifel punched damning holes in this calculation, estimating that the policies would instead cost the exchequer £20bn by 2030 as oil and gas producers shut up shop and invested elsewhere.

For most people, the premature closure of the UK’s oil and gas industry would be no tragedy in the wake of the worsening climate crisis.

But many in the industry believe Labour plans will kill off the goose that lays the black-gold egg. This is expected to fund the UK’s transition to a clean energy system as well as ensure there is no post-industrial collapse like that of the UK coal fields under Thatcher or US car manufacturing in Detroit.

Stifel’s Chris Wheaton estimated up to 100,000 jobs could be lost in a “worst case” scenario – while the trade body Offshore Energies UK (OEUK) predicted that the policies would cause the industry to shed 42,000.

The oil and gas sector is estimated to support 93,620 jobs across Scotland with the vast bulk – over 84,000 – in Aberdeen and Aberdeenshire, highlighting the disproportionate effect the sector has in the region.

Labour is clearly betting that taxing filthy oil companies will play well with most of the UK electorate even if Aberdeen riots – Crighton noted that the “worst-case” 100,000 jobs lost would be five times as many coal miners that were forced out of work in the 1980s – which Labour then deplored.

Earlier in the week, Sarwar attempted to explain how Labour’s watered-down green plans would ensure that Scotland (if not the north-east of Scotland) would be a “global leader” in the transition from fossil fuels to clean energy.

He also predicted Labour will increase its share of the vote in the region in this year’s general election and the Scottish parliament elections in 2026, although this now seems like a faint hope.

Erikka Askeland is a former senior business writer, founder of Mediacraft, and Associate at the Freer Consultancy