Why Rachel Reeves needs North Sea oil and gas in her drive for growth

As well as its aesthetics and transformational benefits for the regions it brought together, the Humber Bridge has its place in political folklore.

This connection between the two sides of the Humber had been aspired to for a century. Early in 1966, the Labour Prime Minister, Harold Wilson, faced a tricky by-election in the marginal seat of Hull. He persuaded the Transport Secretary, Barbara Castle, to announce the construction of the Humber Bridge, Labour romped home, Wilson called a general election and secured another four years in office.

It was a classic case of shrewd politics connecting to a popular policy that really made a difference. If it was happening today, more would be made of the fact that over the decades, the bridge saved countless millions of road miles. So it would also place a large tick in the environmental box.

‘Growth, growth, growth’

The back-story of the Humber Bridge might have seemed encouraging to Rachel Reeves, as she made the same journey to Hull. A bold infrastructure project that made political, economic and environmental common sense… what better affirmation for the Chancellor in the week she committed to “growth, growth, growth”?

Ms Reeves’ journey to this conclusion has taken a few months and Labour MPs would have been grateful if the speech she gave this week had been the launchpad in July. It would certainly have offset more depressing messages about the state of the economy she had inherited, true though they were.

Never mind, rather like a rail journey to Hull, it might have been complicated to get there but she has arrived and the questions now turn to delivery. A cautionary note is that it took 15 years for the Humber Bridge to go from announcement to opening, and processes haven’t exactly speeded up since then.

While Ms Reeves’ speech has been generally welcomed, an obvious caveat is that much of what she announced will take years, or even decades, to deliver. That is not an argument against these plans since you have to start somewhere and delay, to avoid controversy, delivers nothing.

Third runway at Heathrow

The third Heathrow runway is a classic example. Either do it or forget it but 30 years of limbo is the worst option. Scottish interests have supported Heathrow expansion over these years because of its importance for connectivity, not just for passengers but also exporting, and I hope the same consensus can be maintained now it might actually happen.

The Barnett Formula ensures Scotland will benefit proportionately from the commitments made this week and I hope Ms Reeves’ stated desire to work with the devolved government is fully reciprocated. That should be reflected not only in the way money is invested but also in a dynamic emphasis being placed on removing obstacles to delivery. We need to hear these sentiments from Edinburgh as well as Whitehall.

The Chancellor announced that the newly created National Wealth Fund “is establishing strategic partnerships to provide deeper, more focused support for city regions” with Glasgow one of the first four. To keep momentum going, we need to hear what that will deliver. If positivity is the new mood music, then Scotland must join in.

Tories broke their own laws

That “growth, growth, growth” mantra also must respect what already exists and an obvious place to start is in relations with the North Sea industry. This is brought into sharp focus by the Court of Session’s ruling which requires developers of the Jackdaw and Rosebank fields to revise their environmental impact assessments to include how the end products are used.

As the judge, Lord Ericht, made clear, he was not adjudicating on the virtue of these developments but on the fact that consents given by previous Tory ministers were in breach of their own laws, which seems a bit careless. The licences are still valid and development work can continue, which is positive. Any uncertainty should be removed as quickly as possible.

There are parallels with Heathrow. The consequence of not adding another runway is not that fewer planes will fly but simply that they will fly to somewhere else, mainly Schiphol or Frankfurt. Similarly, not producing oil and gas from the North Sea does not mean one drop or therm less will be consumed, simply that it will come from somewhere else where environmental standards are almost certainly lower.

If the principles enunciated by Ms Reeves, to speed up processes and clear away barriers, are applied to the energy transition, then it can progress more quickly and steadily reduce dependence on fossil fuels, no matter where they come from. Common sense suggests that these are two sides of the same “growth” coin and should not be pitted in opposition to each other.

Norway’s example

One good example of what could move quickly and create thousands of jobs is pumped storage hydro where there are several schemes in Scotland waiting to progress but need the trigger to be pulled by the Treasury in the form of a “cap and floor” mechanism which will help underwrite the huge private investment to build these storage schemes that are vital to our renewable energy infrastructure. So let’s get on with it!

That takes me back to Norway where hydro power provides 96 per cent of electricity generation, whose state company is the leading developer of Rosebank and which recently approved 53 new production licences for oil and gas. They clearly see no contradictions and neither should we.

Just like bridging the Humber 60 years ago, joined-up thinking across the North Sea would be good politics as well a powerful signal to support the growth agenda.