By stewartb

The quote comes from an opinion piece written by the Policy Director of the Aberdeen & Grampian Chamber of Commerce (AGCC) published 15 February 2024 in the industry news journal ‘Energy Voice’.

Headline: ‘The Traitors: Back-stabbing TV hit has nothing on Labour – The Traitors: Labour has delivered one of the biggest betrayals in UK industrial history with its North Sea policy’.

Seehttps://www.energyvoice.com/opinion/547861/the-traitors-labour/

This is in response to the Labour Party ‘who just months after heading north to promise “no cliff-edge end” to the North Sea oil and gas sector have delivered one of the biggest betrayals in Britain’s industrial history.’

It adds: ‘The party’s “proper” windfall tax – which will result in energy firms being levied at 78% for another five years – could cost 100,000 jobs, according to an analyst, and cost the Treasury £20billion in lost revenue. To put the devastating job toll in context, it was the axing of 20,000 jobs which sparked the miners’ strikes in 1984-85. This one policy will potentially wipe out five times as many’.

The author warms to his theme: ‘Labour – the party of workers and unions – happy to cast tens of thousands of hard-working men and women on the scrapheap and place a world class Scottish industry on death row.’

Is the Chamber’s policy director joining others in spotting a pattern, a propensity to promise in order to curry favour only to U-turn following a period of obfuscation? – ‘When we welcomed Sir Keir Starmer and Ed Miliband to Aberdeen in November, they looked us in the eye and told us they wanted to work with the energy industry to deliver a transition that leaves nobody behind.

‘They say they want to work in partnership with industry. But just like last summer, when they sprung plans for an exploration ban, this windfall tax extension has been done with zero engagement.’

The writer of the opinion piece notes that ‘Oil and gas will still be 20% of our energy mix in 2050 and a net zero scenario’ before setting a political challenge: ‘If Labour wants to win power, the party needs to prove to industry – and the public – that it can be trusted with our energy transition. The early signs are not good, and if we get this wrong the economic and social damage will be enormous.’

Reading these last remarks got me wondering: what stance did the AGCC and its business members take back in 2014 when Unionist politicians and their allies were downplaying the future economic importance of the offshore oil & gas industry to Scotland and were arguing that for the industry and Scotland’s future to be secure agency must continue to reside in Westminster?

Analysis of windfall tax impact

This opinion piece follows on from a more sober news article in Energy Voice on 14 February 2024 under the headline: ‘North Sea in ‘last year of major spending’ as Labour windfall tax beckons – 20,000 job losses predicted as “best case scenario” under Labour plans.’

Based on an analysis by investment bank Stifel, Labour’s latest windfall tax plans are forecast to see, as a “best-case scenario”, 20,000 jobs lost and under a “worst-case scenario” 100,000 jobs potentially lost. Stifel estimates a cumulative loss of £40bn of investment by the mid-2030s under Labour’s plans which will increase and extend the duration of the Tory’s existing windfall levy whilst removing investment allowances if Labour wins power at the general election.

Stifel’s managing director for oil and gas is quoted: “The best case would be driven by no step-change in tax, managed decline of the existing energy mix i.e. the UK’s oil and gas, and also continued incentives to invest in wind, electrification and maybe hydrogen and CCS.”

The response of trade body Offshore Energies UK (OEUK) is also reported: ’42,000 jobs are expected to be lost due to the policy package from Labour, with investment being “wiped out” through the loss of £26bn of economic value.’

It’s notable that analysts point to ‘a lack of detail from Labour’. Aberdeen and Grampian Chamber of Commerce (AGCC) policy director is quoted: “If Labour wants to win power, the party needs to prove to industry – and the public – that it can be trusted with our energy transition. The early signs are not good, and if we get this wrong the economic and social damage will be enormous.” For a readership in Scotland, this would surely be better written as ‘if Westminster government gets this wrong …’ – and not just the ‘early signs’ but signs from over decades have not been ‘not good’!

Labour’s big policy combo!

It’s worth recalling that as Labour’s windfall tax plans for the Scotland-dominated upstream oil & gas industry are being condemned for the devastation they may wreak, the same party has just ditched its £28 billion per annum green investment ‘pledge’, something which had been a key part of the party’s plans to reach climate targets and secure green jobs.

According to an article by the BBC’s Political Editor on the Corporations’s News website entitled ‘Keir Starmer: Labour ditches £28bn green investment pledge’,‘Labour’s plan was to spend £28bn a year on green energy projects, like offshore wind farms and developing electric vehicles.’

So have we got Labour’s big policy combo of significance for Scotland’s electorate right?

1. Labour’s plan is forecast to quickly kill off investment in Scotland’s oil & gas industry – due to the extraction of more tax from the industry in order to boost over the short term the coffers of HM Treasury from which Scotland may see a princely 10% returned to spend in Scotland – but which may need to be used by the Scottish Government to mitigate the negative economic consequences of the self-same tax policy – so far so bad!
2. Labour has ditched plans for a £28bn per annum investment in the UK (and Scotland’s) transition to net zero – with negative impact on Scotland through no longer having a share of £28bn annually for investment in offshore wind, other renewable energy sources, Carbon Capture and Storage, the kick starting of a hydrogen economy, support for energy saving/efficiency measures etc., etc.  – can Labour’s offer to Scotland get any worse?

Returning to ‘The Traitors’ opinion piece from the Policy Director of the AGCC, it’s fair to report for completeness the criticism of the SNP and the Tory party in the same article: ‘The fact that opposition parties cannot make political capital out of such a ruinous strategy (i.e. Labour’s) highlights just how shambolic energy policy has become on these isles.’

Much as its welcome to have such a rare example of Labour being called out in this way in Scotland, the implied ‘plague on all your houses’ stance of the AGCC director arguably lacks important context and perspective. A considered, robust response to his criticism of the Scottish Government is merited and would be timely – indeed a robust statement by the SNP/Scottish Government confirming strong and continuing commitment limited only by the powers of devolution to a ‘just’ and smooth transition away from oil & gas would be very timely!

It’s worth remembering that the Scottish Government has been consulting widely in the recent past on ‘Delivering a fair and secure net zero energy system’, with an updated plan to secure a just transition to be published later this year. (See https://www.gov.scot/news/delivering-a-fair-and-secure-net-zero-energy-system/ ) The written responses to the consultation from a diverse set of stakeholders are now available on the Scottish Government website.

End note

Given the fondness the BBC and mainstream media in Scotland have for Unionist politicians and their parties – and in this election year, especially the fondness for their latest hope to preserve the Union, the Labour Party – it will be ‘interesting’ to see if (and if so, by whom) the damning responses from the oil & gas sector and its supporters in NE Scotland to Labour’s tax plans will be taken up and amplified. Will BBC Scotland’s business and economy editor give us words of wisdom?

It will also be ‘interesting’ to see what if any response there is from ‘devout’ Labour trade unions, notably the self-styled ‘UK energy union’, the GMB. By chance, on the GMB’s website there is a news article dated 20 November, 2023 entitled: ‘GMB and offshore independents make case for better energy prosperity.’

It reports: ’GMB, the UK’s energy union, has today (Monday 20 November) signed a Memorandum of Understanding with BRINDEX (the Association of British Independent Exploration Companies) to make the case for better energy independence and prosperity as the UK transitions to net zero.’

‘Gary Smith, GMB General Secretary, said: “Answering the energy question is central to addressing the challenges of our time, and the changes we need to make must be done with workers and not to them.

“It should be clear that if the transition is going to succeed then workers’ voices must be at the heart of the plans and policies needed to meet the UK’s net zero obligations, and so too must be the concerns of the industries that support these livelihoods.

“When GMB said the country needed “plans and not bans” if we want better energy independence and prosperity, we meant it. This agreement is about recognising the importance of our offshore sector in that energy and industrial mix, now and in the future, and making the case for it.”

Robin Allan, Chairman of BRINDEX is quoted too: “Now more than ever, the UK needs a strong and investable North Sea that ensures security of energy and good quality jobs. This agreement with the GMB Trade Union heralds a new era of cooperation that will help ensure the country does not squander its energy inheritance and can prosper through the energy transition, as the global market becomes increasingly competitive.”

No doubt given these sentiments, the GMB will be issuing its own statement on Labour’s ‘betrayal’ of the offshore oil & gas industry before too much longer!