Energy Secretary intends to water down flagship pledge made in Labour’s election manifesto
Ed Miliband is poised to reverse Labour’s ban on new oil and gas drilling amid warnings from union bosses that net zero risks crushing British industry.
The Energy Secretary is preparing to soften a flagship pledge made in his party’s election manifesto not to “issue new licences to explore new fields” in the North Sea after companies blamed the policy for a string of production cuts and job losses.
The ban is also strongly opposed by the GMB union, which is expected to demand greater support for manufacturers and measures to lower energy prices at the forthcoming Labour Party conference in Liverpool next week.
Gary Smith, the GMB’s general secretary, has claimed that it is “absolute madness” to restrict investment in the North Sea while increasing dependency on costly imports from abroad.
Mr Miliband confirmed he intended to press ahead with the proposed ban on new drilling as recently as March.
But he is now considering watering down the policy by allowing “tie-backs” – new fields adjacent to existing ones – to be approved, according to The Sunday Times.
A source told the paper: “The question mark is can they do new licences in new fields if they run the infrastructure back to existing licensed blocks.”
A Whitehall insider said the move was designed to “give the sector a few more years” and “sustain the supply chain for longer, which will be needed for renewables”.
Government lawyers have reportedly been tasked with examining whether Labour can claim to be sticking to its original pledge while allowing for extra exploration to go ahead.
It comes after oil and gas developers have claimed Labour is fuelling an exodus of investment and jobs from the North Sea.
As well as criticising Mr Miliband’s drilling ban, companies have also attacked the punishing 78pc rate of tax on oil and gas profits – increased by Rachel Reeves, the Chancellor, last year.
The proposed about-turn has emerged just days before Labour’s annual conference begins in Liverpool, where the GMB is expected to attack the Government over its retreat from the North Sea.
In July, GMB chief Mr Smith claimed “oil and gas is not the enemy” and warned that ministers would “have to rethink it, because the consequences in terms of energy prices, in terms of national security, in terms of the economy and jobs, are so profound”.
“I hope and think that Ed realises that in haemorrhaging jobs through this charge to net zero, the political consequences could be very, very profound for Labour,” Mr Smith told the New Statesman.
Donald Trump also urged Sir Keir Starmer to exploit the UK’s oil and gas during his state visit last week.
Labour has previously insisted that its drilling ban would make little difference because the North Sea is already a mature basin that is in decline.
However, experts have repeatedly warned that Mr Miliband’s policies risk accelerating that decline – depriving the Treasury of tax revenues and making Britain more dependent on foreign imports.
The Telegraph revealed official figures earlier this month that forecast the North Sea is set to produce a billion fewer barrels of oil and gas than expected between now and 2050, with analysts blaming the downgrade on Labour.
According to a separate analysis, the accelerated decline of the North Sea could see half the 200,000 jobs it supports destroyed by 2030 – and mostly in Scotland, where elections are due to take place next year.
US firms Chevron and Apache have already confirmed they will quit the North Sea, while TotalEnergies recently announced plans to sell its operations.
Harbour Energy, another major producer, has also said it will wind down UK investment, cut jobs and prioritise other parts of the world.
That has raised questions over the Government’s promise of a “just transition”, where skilled oil and gas workers will be able to gradually move over into work building renewables.
A source close to Mr Miliband said: “We are working to ensure a policy outcome which delivers on the twin objectives of the manifesto — ensuring a world-leading position on no new licences to explore new fields, and to maintain existing fields for their lifetime.
“We will deliver both on climate leadership and a just transition in the North Sea.”
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