POLITICAL leaders have clashed over the future of the North Sea after a new report claimed up to 100,000 jobs could be lost within just five years if Labour proceeds with its windfall tax plans.
There were heated exchanges on BBC’s Question Time from Aberdeen last night as fresh analysis from investment bank Stifel warned that £30billion of investment will be wiped out by Sir Keir Starmer’s plans to ban future drilling and increase the Energy Profits Levy.
Former first minster Alex Salmond warned accelerating away from oil and gas before renewables jobs are available at scale would leave entire communities out of work. Stephen Flynn, the SNP’s leader at Westminster, invited Scottish Labour’s Anas Sarwar to apologise “to each and every person in Aberdeen” for the damage he believes will be inflicted.
However, defending Labour’s plans, Mr Sarwar claimed their strategy for the energy transition would result in 50,000 extra jobs.
Labour has come under fire for its plan to extend the windfall tax on oil and gas firms by an extra year until at least 2029, increase it from 75% to 78% and remove investment allowances.
Mr Starmer pledged to import a “proper windfall tax on oil and gas companies” who make excess profits if the party forms the next government. He also said Labour would create a new publicly owned energy company, Great British Energy, which would invest in clean energy.
However, analysts at investment bank Stifel have predicted any increases to UK windfall tax and removal of incentive allowances will mean the loss of jobs and skills in the UK North Sea.
Employee numbers could plummet from 200,000 to 100,000 as quickly as the next general election in 2029.
“If Labour follows through with its plans, that would mean that 100,000 of the 200,000 people jobs remaining in oil and gas would disappear,” Mr Salmond told the Question Time audience in Aberdeen.
“That’s the situation. And Labour shall do it long before the tens of thousands of renewables jobs kick-in.”
Mr Flynn added: “The very people and investment required to protect investment, jobs and our economy in the North-east of Scotland for decades to come will be frittered down the drain by the Labour Party.
“It is absurd and Anas Sarwar should be apologising to each and every person in this city.”
But Mr Sarwar insisted Labour’s plans will result in 50,000 extra jobs.
He said: “We have a genuine plan to make the transition. There will be no switching off of the taps and no cliff-edge. Oil and gas will play a significant role for decades to come.
“If we are to make the transition, then we need the companies involved to be partners in making those strategic investments to maximise the opportunities of the green revolution.”
Stifel said its analysis shows an increase in the windfall tax and removal of investment allowances would generate only an extra £6.5bn tax by 2029, not the £11bn that the proposed higher taxes are supposed to generate.
The report adds: “We estimate £20bn lower capital investment between now and 2035 – £30billion lower over the North Sea’s remaining life – as higher tax take renders investment projects uneconomic, which drives North Sea production volumes 50% lower by the end of the decade.”
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, said the Stifel report should act as a “wake-up call” to all politicians.
“For decades, the North Sea has been the backbone of the United Kingdom’s energy landscape. Its oil and gas resources have not only kept the lights on, but this has also been a driving force in the country’s economy, significantly contributing to the UK’s GDP and export excellence.
“This latest data echoes the findings of the Chamber’s recent Energy Transition survey and discussions with many of our members. Current policy and rhetoric WILL be the final straw for the nation’s world class energy sector.
“Around 200,000 people across the UK are employed by businesses involved in North Sea operations. Around a quarter of these jobs are located in the North-east of Scotland which is the region that has most to lose if our approach to energy transition is mismanaged or mistimed.
“The Chamber agrees that Labour’s proposed policy will see medium term tax take decimated, the UK’s dependency on imported LNG increase from 55% today to 80% with no security of supply or price control and at a significantly higher global carbon footprint than domestic production.
“Most concerning of all is that it puts 100,000 of these jobs at serious risk in the next five years. Contrary to current public perception, these people are not climate denying oil fat cats wearing Stetsons and driving muscle cars. No, they are welders, scaffolders, electricians, engineers, project managers – blue collar workers whose livelihoods are at risk if policy is out of step with reality.”