North Sea Oil and Gas Workers: Transitional Support

Barry Gardiner Excerpts

Wednesday 23rd April 2025 Westminster Hall

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move,

That this House has considered transitional support for North Sea oil and gas workers.

I appreciate the chance to have this debate, Sir Desmond, because this is an incredibly important time for the oil and gas industry and those employed in and around oil and gas. I will lay out the context and where we are right now, and then talk about my key asks for the Government, given the current situation and people’s worries about the direction of travel.

I want to start with a quote from the seventh carbon budget:

“As of 2021, direct employment in oil and gas in Aberdeen has declined by nearly one-third since 2015. Household disposable income has fallen and poverty has increased…Some estimates indicate that around 14,000 people in the region will need to have moved to other roles or sectors between 2022 and 2030.”

That is such a stark comment from a well-respected organisation, which has produced an incredibly useful and informative report. It says that household disposable income has fallen and that poverty has increased, albeit not in line with the national average—everybody is feeling the pinch of the cost of living—but as a direct result of changes to the energy industry and the lack of pick-up in the renewables sector to compensate for that.

As a result of political uncertainty, the current situation and direction of travel, there is a real lack of confidence in the energy industry. We expect companies that have previously majored in oil and gas to fund a significant part of the renewables revolution. We expect them to put their money in and fund the offshore wind power that we will need. We expect their skilled workers to transfer into those industries. We are at the point now where we risk losing the significant edge that we have in skills, manufacturing capabilities and people. We risk losing that if the Government do not take action now to ensure that the transition is just and, importantly for this debate, managed properly.

As a result of the lack of confidence, final investment decisions by oil and gas companies, or companies working specifically in renewables and not so much in oil and gas, are being pushed back. Whether that is to do with their inability to get grid connections right now or the Government’s changes to the energy profits levy and extension of the windfall tax—which, by the way, has been stopped in every other country that had such a tax—companies feel that the Government are not going the right way.

Aberdeen and Grampian Chamber of Commerce’s energy transition survey shows that political uncertainty and concern about the political direction of travel has gone from the seventh top worry to the top worry in just two years. Whatever the Government think they might be doing, and whatever rhetoric they might use, the industry does not believe that they have quite got it right, so they need to change where they are going.

[Barry Gardiner (Brent West) (Lab)]

The hon. Lady speaks about the way in which other countries have ended their windfall tax, but does she accept that the basic rate of tax that was being applied by the previous Government to the oil and gas industry in the North sea was the lowest in the world, and that it is only with the windfall tax that it comes up to the global average?

[Kirsty Blackman]

I had concerns about the windfall tax in the first place. I thought that a windfall tax should be applied, but that it should have applied across the board to all those companies that made significant profits during covid, whether that was supermarkets, Amazon or oil and gas companies. Singling out the oil and gas industry was the wrong thing to do at the time. In terms of the comparative level of the tax, I do not know the answer, and I do not want to say something that is not right, but I felt that it was wrongly applied. A number of other companies made significant profits, and the oil and gas industry felt singled out, as though it was somehow different. I accept that it is different from other industries in a number of ways, but the levels of profit were not as high as they were in 2014, for example, and singling that industry out when supermarkets were making a much higher percentage profit than they had in previous years did not seem like the right thing to do.

I appreciate the Government’s work on a skills passport for the industry. That is important, but there is no point having a skills passport if the jobs are not there. We have not seen the offshore wind industry increase at the pace we would like it to, and we cannot do all the work necessary to reduce the amount of oil and gas without those jobs for people to move to. In response to ET40, the 40th energy transition survey by the Aberdeen and Grampian chamber of commerce, one company said that

“Forcing the end of oil and gas for our company before offshore wind is ready to replace the lost revenues”

is one of its biggest concerns. That is how a significant number of companies feel right now.

Companies are struggling to find people with the skills they need, whether in oil and gas or offshore renewables. The people who will be building offshore renewables will be working three-on, three-off shifts, in the same way that oil and gas workers do. It is really difficult to adjust to life on three-on, three-off shifts—it is not easy for workers to change their lives and ensure that someone is home looking after their kids if they have a family. Oil and gas workers have that transferability, because their lifestyle is already set up to do that.

We are at a tipping point. The risk is that these highly mobile, highly paid oil and gas workers will go abroad. The responses to the ET40 survey show that a significant percentage of these people are moving to postings abroad either within company or in other companies. Despite the massive disparities in disposable income, an unbelievable number of people who live in Aberdeen North have been on holiday to Dubai. The majority of Members in this room will not have many constituents who have spent holidays in Dubai, whereas I have heaps, because they have that level of transferability and portability—they can up sticks and move to another country, because drilling is the same there. They might be doing it at a higher carbon cost and with fewer terms and conditions, but they are still getting a highly-paid job. They can uproot to do that, because they are used to moving around the world.

If we do not take control of the situation now, we will lose the skills we need to power the renewable future, which is incredibly concerning. One of the UK Government’s founding missions is to grow the economy. We will not be able to grow the economy if we do not take advantage of this situation, and the time is now.

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[Barry Gardiner (Brent West) (Lab)]

I think this is the first time I have had the pleasure of speaking under your chairmanship, Sir Desmond; I am very pleased to have you in the Chair. I congratulate the hon. Member for Aberdeen North (Kirsty Blackman) on securing this important debate.

It is said that if you remember the ’60s, you were not really there—but if you were there in the ’80s for the closure of the pits, you will never forget. You will never forget the violence; you will never forget the politicisation of the police; you will never forget the devastation of communities. That was an energy transition—I was not just picking up on the remarks of the hon. Member for Gordon and Buchan (Harriet Cross).

This debate takes place at a key point in the transition away from oil and gas production in the North sea. With the Government’s consultation on building the North sea’s energy future under way, and with the clean energy mission driving forward at some pace, securing clean energy generation and the wealth creation and jobs that will go with it is non-negotiable if we are not to repeat the same unjust transition as before.

It is a simple truth that the North sea basin is in terminal decline. That is not a political choice; it is a geological reality. For too long, the previous Government buried their head in the sand and watched as jobs supported by the UK’s oil and gas industry more than halved over the past decade. That is why this Government are right to finally draw a line under new licensing and the illusion of endless new oil and gas.

The stone age did not come to an end for the lack of stone, and the oil age will not come to an end for the lack of oil. It will be because energy can be produced more cleanly and cheaply by renewable technologies. The demand for hydrocarbons is expected to peak globally in the next five years, but energy companies are still adopting business models focused on growing output volume rather than on maximising shareholder value. Creating the stranded assets of the future is bad management, and failing to build the skills base for tomorrow’s future is bad business planning.

The myth that North sea licences are the answer to our energy security is a dangerous one. Hundreds of licences have been issued over the past decades and there has been just 16 days’ worth of gas to show for it. We are lucky to have an abundance of renewable resources in the UK. That is the only route forward to deliver for the workers and communities who are tied to a declining oil and gas industry.

The current North sea transition deal is not fit for purpose. It places far too much responsibility on the companies themselves. Those companies are not delivering what is needed: a mere seven out of the 87 North sea oil and gas operators are even considering investment in renewable energy by 2030. We cannot outsource the future of our workers and our energy security to the very companies whose current business model is failing. We need a radical shift. The time for a coherent deal for the North sea is now. It is vital that the Government commit to bringing forward a bold and ambitious plan with the urgency that this time demands.

Beyond extraction lies an immense opportunity to build a world-leading offshore wind manufacturing sector here in the UK. Our existing wind farms, many of which are in Scotland, provide a fifth of global capacity. They prove what is possible. But it is a scandal—a scandal that the previous Government allowed—that the average North sea turbine is overwhelmingly built with material from abroad. We are exporting jobs and prosperity.

Great British Energy and the National Wealth Fund must be laser-focused on building up a thriving manufacturing sector. A properly resourced clean industry bonus is not just good policy; it has the potential to create 10,000 permanent, direct jobs and 13,000 indirect ones in areas that need it, such as the constituency of the hon. Member for Aberdeen North. Can the Minister confirm what conversations he has had with Cabinet colleagues about the clean industry bonus? Is there any scope to boost the funds behind the bonus to truly seize the moment?

Our renewable ambition is crippled by outdated ports and dockside facilities. The £1.8 billion in the National Wealth Fund is a good start, but if we are to truly lead in home-grown energy, it is crucial that it be expanded. The funding must be safeguarded and expanded, and the Government should be taking equity stakes in ports as critical national infrastructure.

The unjust transition at the refinery in the constituency of my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) and the situation in Port Talbot are warning signs that early Government intervention and investment are paramount if we are to secure the future of our workers. They deserve to experience a smooth transition. Over 90% of the UK’s oil and gas workforce have transferable skills, but they report a lack of support for transitioning into other industries. The energy skills passport is a start, but workers are footing the bill for their own retraining, which often duplicates their existing qualifications. The Government need to commit to streamlining the process. Crucially, the Minister should meet with the Treasury to deliver the £335 million-a-year training fund that unions and climate groups are rightly calling for—a fund that provides paid time off for workers to retrain.

We live in a volatile world. The era of relying on global fossil fuel markets is over. True energy and worker security lies in our own abundant renewable resources. The opportunity to create thousands of high-quality jobs in a new green economy is here. It is within our grasp. I urge the Minister to seize it.

[Several hon. Members rose—]

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[Pippa Heylings]

As I consistently said during the debate about the new oilfields at Jackdaw and Rosebank, none has provided the jobs predicted, which were all offshored to Dubai. On the gas dependency that we have talked about, it is critical that we make sure that we have homegrown energy so that we can take Putin’s boot off our necks. That is the way.

After 50 years of intensive extraction, the North sea is now an ageing and expensive basin. The transition away from oil and gas production is already under way, with reserves in terminal and irreversible decline. Jobs in the UK’s oil and gas industry have more than halved in the past decade: 227,000 direct roles have disappeared, despite the issuing of 400 new drilling licences and record profits for the major oil companies. Moreover, losses in supply chains far outnumber those in the industry. That is neither fair nor just. We must act now to ensure that the transition ahead supports the workers and communities who, as my hon. Friend the Member for Caithness, Sutherland and Easter Ross so eloquently said, have powered Britain for generations, and ensure that they are not left behind.

The future of the North sea can be bright: we boast some of Europe’s best sites for renewable energy. Our current installed capacity of 50 wind farms already accounts for about a quarter of global offshore wind capacity, and our offshore wind potential surpasses our projected energy demand, making it key to our energy security. However, the Liberal Democrats have always been clear that the only way to create long-term, secure jobs is to invest in supporting workers to transition into clean energy industries. The unjust transition of the oil refinery at Grangemouth is a clear illustration—a warning of what happens without early Government intervention and investment, showing that such decisions cannot be left to industry alone.

What jobs are we talking about? We are talking about new jobs within the new manufacturing supply chain and our own domestic green energy supply chain. The UK has consistently failed to seize the full economic benefits of our leadership in offshore wind. As we have heard today, the vast majority of Britain’s offshore wind capacity is owned by foreign companies, and the typical North sea turbine still contains three times more imported material than UK-made content. We need to make sure that our turbines are manufactured here and that our port capacity, in both manufacturing and fixed and floating offshore capacity, is enabled, or that will also be given to other countries. That could create an estimated 23,000 good green jobs, both directly and through supply chains.

[Barry Gardiner]

I appreciate the hon. Lady’s remarks. Does she agree that one way in which Britain could help ensure that the transition is not only just, but orderly and managed, would be to do what countries such as Denmark have done—join the Beyond Oil & Gas Alliance?

[Pippa Heylings]

Yes, we should join the Beyond Oil & Gas Alliance. We very much support that. Following COP28, we are looking forward to COP30. Hopefully, the UK can once again demonstrate global leadership, as part of an alliance of other countries that finally has a clear transition pathway.

Our UK port capacity is currently one of the key bottlenecks slowing our renewables roll-out. UK ports and dock-side facilities urgently require upgrades so that they can handle industrial-scale floating offshore wind, including access channel size, landside availability and crane capacity. The Government’s proposed National Wealth Fund is welcome, but we need to see that it is secured and even expanded.

We need to make sure that workers are prioritised as part of the new manufacturing industry and the supply chains. Research has shown that over 90% of the UK’s oil and gas workforce have transferable skills, but face a lack of support in transitioning to the clean pathway. As vice-chair of the all-party parliamentary group on climate change, I was pleased to meet an oil and gas worker from Aberdeen last month as part of a roundtable to discuss the challenges and opportunities facing workers. She described how Aberdeen has an abundance of STEM skills ready to drive forward the transition to clean energy, but workers are having to pay out of their own pockets to gain new qualifications, often duplicating qualifications that they already have.

It is clear that more concrete support is needed to support workers in finding and moving into alternative employment, from improving the energy skills passport to addressing training barriers and, more broadly, delivering a new deal for the North sea that has workers’ needs at its core. Will the Minister commit and show us how the Government plan to ensure that clear, accessible pathways are in place to support workers to move between industries?

In conclusion, Putin’s barbaric and illegal invasion of Ukraine exposes the risks of relying on countries that may seek to exploit our dependence on fossil fuels and use it to their advantage. Oil and gas workers built the foundations of Britain’s energy system. As we chart a new path forward, it is our moral and economic duty to ensure that they are not abandoned but empowered, respected and placed at the very centre of that journey.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

It is a pleasure to serve under your chairmanship this morning, Sir Desmond. I congratulate the hon. Member for Aberdeen North (Kirsty Blackman) on bringing such an important issue to Westminster Hall today and on opening the debate with such an eloquent and passionate speech on behalf of her constituents.

For many of us here today, this is a deeply personal debate. We all know or are related to people employed in the oil and gas industry off the north-east coast of our country. Finding a solution and ensuring that the transition is indeed just for those workers is vital for our constituents. We often talk about needing the North sea for our energy security, to produce the tax revenue for the Exchequer and to support supply chains and local economies. It sounds incredibly intangible at times, but for the 200,000 people employed in the oil and gas industry, directly or indirectly, the impacts of the transition in the North sea will be very tangible indeed. As the decline accelerates, we risk seeing lost incomes and lost futures in whole communities without a purpose. That is 200,000 employees up and down the entire United Kingdom: the oil and gas supply chain touches nearly every single constituency in the United Kingdom, but more than 68% of all direct employment is in Scotland, and more than 80% of that is in the north-east of Scotland, in and around Aberdeen.

In my own constituency of West Aberdeenshire and Kincardine, everybody knows someone who relies on the offshore industry for their livelihood. Just last week, during recess, I was in Westhill speaking to companies. That town is the subsea exploration capital of the world and home to Total, Technip, Tetra, Subsea7 and more. The oil and gas industry is the lifeblood of the north-east of Scotland. That is evident to anybody who visits.

Although I pay tribute to the hon. Member for Aberdeen North for the passion that she brings to the debate and her concern for her constituents, I cannot help reflecting on the rhetoric emanating from the Scottish Government over the past few years and their presumption against oil and gas, which has contributed to an increasingly pessimistic outlook for the North sea. When we engage with oil and gas companies, it is the language and the tone that we use to describe the situation in the North sea that they say is driving away the investment that they need to drive forward new technologies such as offshore wind, whether floating or fixed bottom. When we say “decline”, “ageing” or “terminal”, that does not give investors from overseas a thriving and attractive investment picture. We need to address that language.

[Barry Gardiner]

Does the shadow Minister believe that investors do not know that it is a declining field?

[Andrew Bowie]

Of course, the hon. Gentleman is right that it is a declining basin—everybody is aware of that—but we must be careful about the language we use about it. We should point out the positives that can be achieved through further investment and recognise the profits being realised by energy companies engaged primarily in the extraction and exploitation of oil and gas underneath the North sea. They will be investing in those new technologies, and they need to convince shareholders—who are deciding whether to invest in the middle east, south-east Asia, the United States of America or elsewhere in the globe—that the North sea is still an attractive place to invest.

The language that we use about that basin and the industry in the United Kingdom is incredibly important, so I urge the hon. Gentleman to engage with the industry and speak to individuals—as I have; I know that the Minister, the hon. Member for Aberdeen North and others do too—because that is exactly what they tell us. They want to contribute to the transition—indeed, they lead it—but they want the negative atmosphere overshadowing the North sea to change. That means changing some of the rhetoric and language used to describe the industry, which is so important to the economy of the north-east of Scotland.

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[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.

[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.