Britain’s biggest trade union and Labor’s financial backer staged a protest on Thursday and published an open letter calling for a review of the oil and gas ban signed by nearly 200 local firms from Scottish towns dependent on the oil and gas industry.
One area of policy that the Labor Party has been very specific about during this general election campaign is its approach to oil and gas development in the North Sea.
The party has made it clear that it will increase existing windfall taxes first he slapped on North Sea oil and gas producers in 2022 Rishi Sunakwhen he was chancellor, taking the total amount of taxes from the current 75% to 78%.
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Ed Milibandthe shadow secretary of state for energy security and net zero, also proposes to remove the tax breaks Mr Sunak introduced alongside the windfall tax to taste the pill, allowing manufacturers to offset their investment in new generation with their tax bills.
Describing the tax breaks as “loopholes”, Mr Miliband says it would bring tax treatment in the British North Sea in line with the Norwegian North Sea tax regime. He also proposes a ban on new oil and gas licenses as part of what remains of his ‘green prosperity plan‘.
WITH Work so far in the surveys, that is it already has an effect on investment in the North Sea, with a trio of companies – Jersey Oil and Gas, Serica Energy and Neo Energy – announcing earlier this month that they are delaying the planned start of production at the Buchan oil field 120 miles northeast of Aberdeen.
Industrial attacks
Serica, which has produced an average of 43,781 barrels of oil or oil equivalent per day this year, today sought to remind politicians of the possible consequences of their actions.
David Latin, chairman and interim chief executive of Serica, launched a furious attack on the proposals, telling shareholders: “I have been involved in this industry for over 30 years and have worked all over the world.
“Apart from when I was responsible for a company that had significant assets in a war zone, I have never encountered a situation as challenging in terms of investment decisions and future planning in general as in the UK in of the present.”
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Reminding his audience that the UK consumes almost twice as much oil and gas as it produces, Mr Latin said the deficit would persist even as the country sought to reduce hydrocarbon consumption, with imports filling the gap.
He added: “These imports worsen our national balance of payments, bring only jobs and taxes to foreign countries and usually have higher carbon emissions from production and transport before they reach our shores.”
Addressing misconceptions
Criticize conservatives for the continued windfall despite oil and gas prices returning to historically normal levels, and for Labor proposing to increase them, Mr Latin said there were a number of misconceptions surrounding the tax regime – not least the notion that pay a windfall tax mostly by oil companies such as Shell and BP.
He continued: “As for the claim that the tax is being paid by the ‘oil and gas giants’, it is actually independent companies like Serica that are most affected. The ‘big ones’ only account for about a third of UK production. and the vast majority of their profits are made overseas and are unaffected by rising UK production tax rates.
Labor does not “turn off the taps” of oil and gas
“For companies like Serica, which continued to invest in their assets during periods of lower commodity prices prior to the invasion of Ukraine, the current fiscal regime represents further punishment for venture capital injected into its portfolio during very low commodity prices. seen during the COVID period.
“Closing ‘loopholes’ in UK oil and gas tax seem to mean different things to different people.
“Whatever this means, I want it to be made very clear that reducing capital expenditure tax relief below the rate at which tax is paid would cause the vast majority of UK projects in the North Sea to lose investment, meaning that these projects , the jobs and tax revenue they would generate, it just isn’t going to happen.”
Trade union criticism of Labour
But criticism of Labor’s policy today also came from another direction.
UniteBritain’s biggest trade union and traditionally Labour’s biggest financial backer, is also concerned about a ban on new oil and gas exploration licenses that could force the UK to import more gas when it still has plenty of its own.
Today, she published an open letter calling for a review of the ban signed by almost 200 local firms from Scottish towns dependent on the oil and gas industry – as some of those businesses joined Unite members in a demonstration outside Aberdeen’s Maritime Museum.
Sharon Graham, general secretary of Unite, said: “Until Labor has a concrete plan to replace North Sea jobs and ensure energy security, the ban on new oil and gas licenses should not go ahead.
“Labour must not allow oil and gas workers to become this generation’s coal miners. Scotland’s oil and gas communities are crying out for a secure future and that is what Labor must deliver.”
But while businesses warn that Labour’s policies will divert investment and unions fear the impact on jobs and local communities in north-east Scotland, there are others who think the party could go further.
It doesn’t go far enough
While Unite held its demonstration in Aberdeen, around 50 protesters from a group calling itself Stop Polluting Politics were holding one of their own 553 miles south at Labor headquarters in Southwark, south-east London.
They claim the party has “financial ties to polluting corporations” and criticized the decision Rachel Reevesshadow chancellor, do accept a £10,000 campaign donation from Lord Donoughue, the Labor MP who previously chaired the Global Warming Policy Foundation – a lobby group for climate change sceptics.
They claim Ms Reeves’ decision to “water down” Mr Miliband’s “green prosperity plan” in February this year was influenced by the donation – something Lord Donoughue himself has vehemently denied.
All this highlights how energy policy threatens to become a major headache for Labor if it wins the election a week from now.