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Andy Burnham will stick to Labour’s contentious ban on new exploration licences in the North Sea, dashing oil and gas industry hopes for a radical change in government policy towards fossil fuels.
With the incoming administration under pressure to cut household bills, deputy party leader Lucy Powell said on Sunday that fossil fuels from the North Sea would be part of Britain’s energy mix.
But she insisted that Burnham would not overturn Labour’s manifesto pledge to end new exploration licences in the North Sea. “Andy has been clear he stands by the policies in our manifesto in relation to that,” she told the BBC.
One industry figure told the FT: “If they don’t reverse the ban on new exploration then the industry will be very unhappy indeed.”
Reports in recent days had suggested that Burnham would pivot towards a “drill baby drill” approach to the North Sea, an oil and gas basin approaching the end of its life.
US President Donald Trump responded to those reports on Sunday by posting on Truth Social: “The People of Aberdeen, in Scotland, are dancing in the streets because the new Prime Minister, Andy Burnham, has stated that he will be opening up, all the way, the invaluable North Sea Oil!”
But Powell appeared to reject the notion that there would be a radical shift in approach, saying: “I don’t think it is a change of policy, more a change of emphasis.”
The deputy Labour leader said the government still believed that the best way to achieve lower bills and greater fuel security was through “clean” renewable and nuclear energy.
“We’ve been absolutely clear that North Sea gas and oil is an important part of that transition,” she said.
“And I think what Andy is talking about is taking a more pragmatic approach and working with the industry to make sure that it can contribute to that transition and to the mix that is needed over the long term.”
Powell made the comments after Burnham promised to help households with the rising cost of living, which has been exacerbated by the surge in energy prices unleashed by the Iran war.
One of his first acts after becoming prime minister on Monday will be to scrap the Labour government’s digital ID scheme in a “reset of priorities” while the water sector is braced for the administration to seize control of struggling utility Thames Water.
Some oil and gas industry figures still hope that Burnham could ease companies’ tax and regulatory burdens in other ways, such as softening the windfall levy on the sector.
Burnham is planning a trip to Aberdeen, the centre of the North Sea oil and gas industry, to reassure local workers and trade unions about Labour’s energy policies as part of a tour of the country after taking office.
Although he will adhere to the moratorium on new exploration licences, he is expected to emphasise Labour’s support for greater use of “tiebacks”, which allow further drilling next to existing fields. Industry leaders feel a different administration could allow more flexibility on tiebacks.
Enrique Cornejo, policy director of Offshore Energies UK said: “The incoming prime minister needs to deliver a genuine change in policy. He must clearly recognise the value of domestic energy production and back North Sea oil and gas over imports.”
The government must soon decide whether to approve the Jackdaw gasfield and Rosebank oilfield off the coast of Scotland, whose futures were thrown into doubt by a court ruling last year.
Sir Keir Starmer had wanted energy secretary Ed Miliband to approve the projects — which do not breach Labour’s manifesto promise as they received their licences years ago — but both have long been entangled in a complex judicial process.
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While officials expect Burnham to approve Jackdaw and possibly Rosebank, the incoming administration has confirmed neither.
Polling last week from Opinium found 71 per cent of respondents backed domestic production of oil and gas. The idea of ending the moratorium on new exploration was backed by a margin of 49 per cent to 24 per cent.
Gary Smith, general secretary of the GMB trade union, which is an affiliate of Labour, said the party’s policy was not sustainable and it was essential to have a secure domestic energy supply in a dangerous world.
“Increasing our reliance on imported energy from overseas also has a damaging impact on the nation’s finances,” he said. “It’s high time to put a stop to the current reckless and damaging policy of choosing imports over UK energy production.”
But Tessa Khan, executive director of campaign group Uplift, said it would be a “terrible look if the first thing Andy Burnham does is cave to the demands of oil and gas profiteers”.
Source:
www.ft.com