North Sea Oil and Gas Workers: Transitional Support

(Limited Text - Ministerial Extracts only)

Wednesday 23rd April 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve under your chairship, Sir Desmond. I join others in congratulating the hon. Member for Aberdeen North (Kirsty Blackman), not just for securing this important debate but for the tone with which she introduced it. Her seriousness and passion came through in her contribution. I genuinely thank her for that, as well as for all the conversations we have had on this important topic.

It has been a wide-ranging debate, but at the heart of all the contributions have been three key things, which I will try to sum up. First, we may all disagree on the timing, pace and detail of the transition, but there is an acknowledgment and understanding that a transition in the North sea is under way. It is important to recognise that. Secondly, if we accept that, as it seems we all do, then we need a credible and detailed plan for how to manage the transition. The hon. Member for Aberdeen North put it well by saying that the transition needs to be managed properly, and I will come back to that point. Thirdly, the workforce must be at the heart of any plan and transition. The shadow Minister made the point well: this is deeply personal for anyone with a job in the oil and gas sector, but particularly in north-east Scotland, where there is a significant concentration of workers in the industry.

Many Members have spoken about the importance of oil and gas in our energy story. A few months ago, I was pleased to be at BP’s headquarters to celebrate the 60th anniversary of the first licence being issued in the North sea, and there was a powerful video of the history of some of BP’s offshore infrastructure. The engineering skill that it has taken to extract oil and gas from extremely difficult North sea waters over the past 60 years is extraordinary and, as I have said on a number of occasions, we should be very proud of that workforce and everything it has achieved.

Oil and gas will continue to play a critical role in our energy mix and economy for decades to come. However, as we and the world embrace the clean energy transition, I want us not just to be proud of the history of the North sea but to be hugely ambitious and excited about the opportunities in the next chapter of our energy story. Our clean power mission is about not just driving forward clean power in this country but creating the jobs in manufacturing and industry that go along with it, and it is critical that those jobs materialise in the communities that have been mentioned.

It is right that we recognise that tens of thousands of jobs have been lost in the sector over the past 10 years. The truth is that we should have been planning for this transition a long time ago. My hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) talked about Grangemouth. There is no greater example of the failure to plan for the transition than Grangemouth: we knew years ago that it was in a precarious position and should have been planning for the workforce at that point. My driving purpose in my role is ensure that we do not make the same mistake again in the wider North sea sector.

The hon. Member for Aberdeen North asked whether the Government are listening, so I want to say how much we have engaged with the sector and how much time I have spent in Aberdeen listening to the industry—not just the oil and gas companies themselves, but the companies involved right through the supply chains, in decommissioning and in training. I had an interesting visit to a training provider and met apprentices who are working in oil and gas in the immediate term but will transition into renewables. They are being trained both on oil and gas platforms and on the renewables jobs that come next. Exciting work is going on, and we need to capitalise on it and speed up such projects across the city and the north-east.

We have a fantastic opportunity to utilise the skills that are already in Aberdeen, which many Members have mentioned. Given the global race for skilled workers and for much of the equipment and the supply chains for the clean power missions around much of the world, we have a real opportunity to capitalise on that in Aberdeen. I suspect that the ears of Robert Gordon University will be burning after this debate, given the number of times it has been mentioned. I had a fantastic visit there a few months back to go through some of the data in great detail, and it was fascinating.

Members made the point about the number of jobs that are transferable from oil and gas into renewables. That presents us with an enormous opportunity to provide long-term, sustainable jobs for people. The pace at which we do that, and the methods we use to support the workforce to transition, are key, which is why, when we came into government, we were determined to work with the Scottish Government and with industry to move forward on skills passporting, and we have launched the first phase of that. There is clearly more work to do on expanding the passporting process, but that is a sign that we are taking practical action to support the workforce to transition.

The hon. Member for Aberdeen North asked about a plan for the transition, which was a good point to make. We have launched our consultation on the future of energy in the North sea. We were keen for that to be a genuinely open conversation with industry, communities and trade unions about what the future of energy in the North sea should look like—not a conversation focused narrowly on a series of specific questions. The consultation is still open: there is a week left for those who have not had a chance to submit their responses—I am sure that many thousands are watching this debate online—so please do submit them. It is a key opportunity. We have deliberately asked open, broad questions so that we can have a genuine conversation about the future of energy in the North sea.

The first section of the consultation deals partly with the data and the science about the decline of the North sea basin. The shadow Minister rightly made the point about language. I have always been careful about the language that I use, but it is important to recognise that the declining nature of the basin means that we have to start planning now for what comes next. As part of my engagement on the issue I have had a number of roundtables, including with trade unions a few weeks ago, to look at the specific support that is necessary for the workforce now.

[Barry Gardiner]

The trade unions and others have made a case for £335 million a year to be invested in skills and training to ensure that workers are not unpaid on their training days, among other things. What conversations can the Minister have with colleagues to ensure that that happens?

[Michael Shanks]

I thank my hon. Friend for his contribution to the debate. He is right that it is about not just the passporting and the training available but, importantly, the ability of workers to access it. I will take away that point, which also came up in the roundtable with trade unions. We have launched a number of skills pilots in four areas, of which Aberdeen and Aberdeenshire is one. The process there is slightly different from that for the other three, because skills are devolved to the Scottish Government, so the UK Government’s role is slightly different, but we want to work in partnership to ensure that we deliver. I will take away the point away and come back to it.

[Andrew Bowie]

I pay tribute to the Minister’s continued commitment to and engagement with the industry and the region. It seems, given the amount of times he is in and out of the north-east of Scotland these days, that he may be buying a second home in my constituency. Of course, we welcome that, because any engagement with the Government is positive. The tone with which the consultation on the future of North sea energy was launched was incredibly positive and has been warmly welcomed. However, there is also an ongoing Treasury consultation on the post-EPL fiscal framework; what engagement is the Department having with the Treasury on what that will look like? Is there any opportunity to speed up the process by which we can replace the energy profits levy?

[Michael Shanks]

I thank the shadow Minister for making that point. We deliberately launched the consultation on the future of energy and the Treasury consultation on the future of the EPL at the same time, because we want to bring them together to give certainty about the future of industry. My hon. Friend the Exchequer Secretary has been in Aberdeen a number of times and, indeed, we have we have had many of the same engagements, dealing with the fiscal forum and others and having the conversations. I engage with Treasury colleagues regularly on this question. The EPL, which has changed many times under both Governments, has not given industry the confidence it is calling for. We have been clear that it will end post 2030, and we want to put in place a regime that gives confidence about what the landscape looks like but still has the recognition of excess profits built into it. The consultation is open for, I think, another two or three weeks.

[Barry Gardiner]

The taxation regime is critical to the ability of companies to make profits in the North sea. We have the lowest base rate of tax on oil and gas production companies in the world, and it is only because we have the windfall tax that we take the rate up to the average. The Minister needs to look at the investment that would be available were we not subsidising the operations from the public purse. It is not quite the zero-sum game that he suggests.

[Michael Shanks]

I thank my hon. Friend for his contribution, but he tempts me into both concluding a consultation and speaking on behalf of the Treasury—two things that I absolutely will not do. But he made an important point. The purpose of the consultation—again, it is an open consultation with all those in the sector—is to get to the heart of some of these questions.

[Kirsty Blackman]

Will the Minister agree to consider the timescale of the consultation outcomes so that people have the earliest possible notice, in advance of next year’s budgets, if possible?

[Michael Shanks]

I was going to come to that point, which has been well made. In both consultations, we are looking internally at how quickly we can turn around the responses. Clearly, there is a balance to be struck, particularly in respect of the consultation on the future of the North sea. It is a hefty document and we expect a significant number of responses, which is a good thing. There is also a balance to be struck between turning around a response quickly and having a credible, detailed look at all the evidence that has been submitted, but we are trying to move as quickly as possible with both consultations.

I want to turn briefly to the point about the future, and the points that a number of Members made about investment in clean energy. It is right to say that the future of the North sea has enormous potential for offshore and floating offshore wind, and for a number of other industries, such as hydrogen and carbon capture. Since coming into government we have moved as fast as possible to drive that forward, including establishing, as the hon. Member for Aberdeenshire North and Moray East (Seamus Logan) mentioned, Great British Energy in Aberdeen—although I cannot help but notice that the SNP did not support that. It is all about driving investment, not just by creating jobs in Great British Energy’s headquarters but through the investments it makes in supply chains and developments throughout the country, particularly in the north-east of Scotland.

We oversaw a record-breaking renewables auction and, as many Members mentioned, we are currently working through the process of the clean industry bonus, which is designed to reward investment in good manufacturing jobs and clean supply chains. This gets to the heart of the point made by many Members about how we bring the benefits of the clean power mission to the UK, delivering the industrial jobs that too often have been missing in our transition. Of course, the clean power action plan will drive £40 billion a year of private investment towards our goal of clean power by 2030.

I am conscious of the time, but I want to reflect on two brief points that the hon. Member for Aberdeen North made in her closing remarks. The first is about listening to communities, which is important, and I will continue to do that, as will my colleagues. The second is about the oversight and management of the plan, which is a question we are looking at. I am always slightly resistant to simply saying that setting up a taskforce or a commission is the answer, but the point that the Just Transition Commission made, and that the hon. Lady also made, is right: we need to grasp it at the heart of Government, and we are actively looking at that.

I again thank the hon. Member for Aberdeen North for her important contribution. The future of the North sea is incredibly important for all our communities, particularly in the north-east, but also for our energy and our economy in a wider sense. We are determined to deliver a credible, just and prosperous plan for the future, for the workforce now and in generations to come.