MPs deliver 'grim' verdict on Labour's oil and gas strategy amid 'heaving job losses' warning
Labour ministers have been warned the “scale-up of clean energy is progressing more slowly than the decline of the oil and gas sector” with jobs being lost as a result.
The UK government must stop accelerating the decline of the oil and gas sector amid fears clean energy jobs “are not being created at the pace and scale required” to “match heavy job losses” from the North Sea, a new stark report has warned.
The "grim" warning, issued in a cross-party report from the House of Commons Scottish Affairs Committee, comes as the Labour government faces intense pressure from the industry to bring forward reforms to the energy profits levy or windfall tax - with the committee warning that without a rethink by the Chancellor, ministers are poised to “accelerate the decline of the North Sea oil and gas industry...resulting in job losses”.
The industry body, Offshore Energies UK (OEUK) has warned the report is “a stark reminder that the UK’s energy future must be managed carefully”.
The report says: “We are concerned that clean energy jobs are not being created at the pace or scale required to match the heavy job losses arising from the decline of the North Sea oil and gas sector.
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“The scale-up of clean energy is progressing more slowly than the decline of the oil and gas sector. The government should avoid accelerating the decline of North Sea oil and gas production through its policy environment while this remains the case.”
The committee has called on Labour ministers to" urgently address this gap" in employment with "increased government investment proportionate to the scale of the challenge".
The report adds: "The government must set out clearly how its investments and policy environment will create the jobs and revenue necessary to replace the jobs being rapidly lost in North Sea oil and gas.”
The North Sea oil and gas sector and business leaders in the North East have repeatedly called for the Chancellor to bring forward her proposed draft reforms to the energy profits levy, due to come into force in 2030, to next year.
The new report has warned that because oil and gas will be required for “decades to come”, the “fiscal and regulatory regimes should reflect that”.
It adds: “We are concerned that without reform the levy will accelerate the decline of the North Sea oil and gas industry and its associated supply chain, resulting in job losses.
“To provide much-needed clarity and confidence to the sector, the successor regime should be brought into effect as soon as possible, rather than replacing the energy profits levy from 2030.”
The committee also examined the response by the Scottish and UK governments to the Grangemouth oil refinery closing, branding it “the energy transition’s canary in a coalmine”.
The report adds: “Both the UK and Scottish governments should have acted sooner to prepare for the resulting job losses and set in motion a feasibility study for future industries at the site at a much earlier point.
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“This lack of action created an employment gap and trauma for the local community that could have been avoided.”
Scottish Labour MP, Patricia Ferguson, chairwoman of the Scottish Affairs Committee, said: “Today's report outlines our concerns that jobs from the clean energy industry are simply not being created fast enough, or on the scale needed, to match the mounting job losses from the oil and gas sector.
“It’s vital that the government moves quickly to plug this employment gap, replace jobs being lost and ensure a smooth energy transition for workers and communities. Until this is tackled, the government should avoid making decisions that would further accelerate oil and gas production’s decline.”
Katy Heidenreich, OEUK’s supply chain and people director, said: “Today’s report is a stark reminder that the UK’s energy future must be managed carefully, and the Scottish Affairs Committee adds to a growing chorus of voices calling for the energy profits levy to be reformed at the upcoming budget.
“We already have a clear plan for jobs and our supply chain - one that makes the most of our world-class oil and gas expertise while accelerating new opportunities in wind, carbon capture, and hydrogen. The real story is not that clean energy jobs aren’t replacing oil and gas jobs, but that we have a path to deliver both, if government policy supports it.
“We urge the government to act now: reform the energy profits levy, provide a stable investment environment, and back the projects that will fill order books and create jobs across the UK.”
But climate campaigners have warned that more drilling for oil and gas is not the answer to ensuing jobs are not lost in the energy transition.
Io Hadjicosta, climate and energy policy manager at WWF Scotland, said: “New drilling won’t fix energy security, lower bills, or protect workers. Only investing in renewables, building up our supply chains and creating jobs where they’re needed most can reverse this devastating trend.”
Louise Gilmour, GMB Scotland secretary, said: “The alarm bells around the so-called just transition have been ringing constantly for years but are now deafening.
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“The MPs’ report is grim but completely unsurprising and comes days after the Scottish and UK governments were continuing to insist they have a plan. If they do, it is beyond time to share it.”
SNP energy spokesperson Graham Leadbitter, accused the Labour government of “destroying jobs in Scotland’s offshore industry with its fiscal and licensing regime”.
Scottish Conservative shadow Scotland secretary, Andrew Bowie, claimed Labour and the SNP’s “irrational desire to kill off this crucial industry” was “tantamount to an act of national self-harm”.
He added: “We all want to see action on the energy transition, but renewables alone won’t keep the lights on, we still desperately need North Sea oil and gas as part of our energy mix, along with nuclear.”
A UK government spokesperson: “We are not willing to accept the status quo we inherited of the North Sea being in decline.
“This is why we have taken rapid steps to deliver the next generation of good jobs for North Sea workers in a fair and orderly transition, including by making the biggest investment in offshore wind and carbon capture.
“Our landmark clean energy jobs plan will deliver the next generation of skilled jobs across the country, where Scotland could see over 40,000 new jobs by 2030.”
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