Oil and Gas

Martin McCluskey Excerpts

Tuesday 24th March 2026 Commons Chamber

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

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“welcomes the Government’s approach to the future of the North Sea, which maintains existing oil and gas fields for their lifetime, as well as introducing Transitional Energy Certificates while accelerating the transition to clean energy; notes that new licences to explore new fields would take many years to come online and would make no difference to energy bills; recognises that oil and gas prices are set on international markets; and further welcomes the measures announced by the Government to go further and faster on national energy security by reducing reliance on volatile fossil fuel markets and expanding secure, home grown clean energy.”

As I have said many times in this House, the North sea oil and gas sector is one of our great industrial success stories. We are proud of the role that the North sea’s workers and communities have played in helping to power our country and the world for decades, and we recognise the role that oil and gas will play in our energy mix for decades to come, as well as the vast skills and experience of our offshore workforce. However, as a Government we also have a duty to be honest about the challenges we face, and the reality is that more domestic oil and gas production will not make us more energy secure and will not take a penny off bills. There is a lot of debate when it comes to this issue, so it is important to focus on the facts.

[Richard Tice]

rose—

[Martin McCluskey]

And on that point—about facts—I will give way to the hon. Gentleman.

[Richard Tice]

Earlier today, the Secretary of State refused to answer my question about why the price of gas in the United States is between a third and a quarter of the price of gas here in the UK. Perhaps the Minister could help us all and help the British people with that question, which goes to the heart of the price of gas and the size and cost of our bills.

[Martin McCluskey]

As the hon. Member will know, the price of gas and oil is set on an international market and, as I have said, extracting more from the North sea would not make a penny’s difference to the price in this country.

The North sea is a super-mature basin that accounts for around 0.7% of global oil and gas production. Production has been naturally falling for more than 20 years, which means that our North sea no longer has the reserves available to support domestic energy demand. Crucially, any new licences now would not make any difference to people’s energy bills because, regardless of where it comes from, oil and gas is sold on international markets, where we are price takers, not price makers.

[Graham Stuart]

If we were to accept the argument that it would make no difference to the international price—notwithstanding the fact that there are global markets and that supply and demand leads to much lower prices in some places than in others—we are still talking about billions of pounds in forgone taxes, which could be used to reduce prices, to reduce VAT and to reduce all sorts of impositions on the British people, saving not pennies but many pounds on ordinary people’s bills. That is true, isn’t it, Minister?

[Martin McCluskey]

The Conservatives want us to remove a tax that is contributing £12 billion to the Exchequer, funding our public services and allowing us to invest in our schools, hospitals and other public services. If they oppose that funding, they need to come forward with their own proposals. The only route to energy security and lower bills is to get off our dependence on fossil fuel markets over which we have no control, and on to clean home-grown power over which we do.

[Tom Tugendhat (Tonbridge) (Con)]

There seems to be a complete failure to understand how the gas market works. It works on piped gas, on local markets and on an integrated supply and consumption system, yet the Minister is addressing it as though it involves shipped oil. It is not the same market, yet he is dealing with it as though it is. Could he please begin to address the fact that this is a very different market?

--- Later in debate ---

[Martin McCluskey]

We have been importers of gas since 2004, and the Conservatives will know—because they presided over the period of decline—that it has been declining for some time.

Recent events in the middle east are yet another reminder of the need to speed up the transition and protect British people from price shocks. Thanks to our mission to make the UK a clean energy superpower, we have already seen £90 billion of investment announced for clean British energy, but we are now determined to go even further and faster in pursuit of national energy security.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I accept the Minister’s point about having more home-grown energy, and renewables can be good for insulating ourselves from economic shocks, but he will know that great swathes of our industrial base are gas dependent, not least the ceramics industry. What message does he send to them? The current price per therm is twice what it was three weeks ago. Those business are renewing their contracts. This is going to kill industry in certain parts of our foundational sector that we need to meet our mission, so what is the Government’s message to those industries?

[Martin McCluskey]

My hon. Friend is a real advocate for the industries in his constituency. The Minister for Industry is looking in detail at this and coming forward with proposals for industry to take us through this moment, as we deal with the situation in the middle east.

We are bringing forward the next renewables auction months after our most successful auction ever secured enough power for the equivalent of 16 million homes. Just today, we set out plans to make plug-in solar available in supermarkets so that more people can put a panel on their balcony or outdoor space and begin saving energy. We are also ensuring that heat pumps and solar panels will be standard in new-build homes.

The energy profits levy has been mentioned by a number of hon. Members across the House. Since its introduction in 2022, the levy has raised around £12 billion. As I said earlier, this revenue supports vital public services. As the Chancellor noted at the recent spring forecast, the energy profits levy will be replaced by the new oil and gas price mechanism in 2030, or sooner if average oil and gas prices over six months fall below the thresholds of the energy security investment mechanism. The Chancellor recognises industry’s calls for the EPL to be replaced by the mechanism, and wants to work with industry to provide certainty on the future fiscal regime while taxing the windfall profits of energy companies.

[Harriet Cross (Gordon and Buchan) (Con)]

On the energy profits levy, the Office for Budget Responsibility’s forecast last year downgraded the expected income from oil and gas by 40% between March and November, and by another 20% between November and March this year. By 2030, we are now expecting only £100 million from a sector that used to bring home billions. That is because of the EPL and the ban on licences. That is the impact that Labour is having on the oil and gas sector.

[Martin McCluskey]

The hon. Lady will know that this is a windfall tax on windfall profits. If there are no windfall profits, there will not be a windfall tax.

The motion calls for an end to the ban on oil and gas licensing. The Government have been clear that we will support the management of existing fields for their lifespan. That is why we have committed to introducing transitional energy certificates, which will enable some offshore oil and gas production in areas adjacent to already licensed fields linked via a tieback or in areas that are already part of an existing field. New licences to explore new fields would make no material difference to overall production and would run contrary to the science on tackling the climate crisis.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Why does the Minister think the strategy of this Government is so different from that of Norway? Nobody doubts the commitment that Norway has to the environment and net zero, and yet it is pumping more oil and gas than it has done for a very long time, notwithstanding its longer-term commitment to net zero.

[Martin McCluskey]

Norway has managed its fields in a very different way from the way this country has over the course of 40 or 50 years. Every country will take its own decisions on how best to secure its own energy supply, and many other countries are taking a similar approach to the United Kingdom.

Let me turn to Jackdaw and Rosebank, which are addressed in the Opposition motion. At the outset, I should say that it would be inappropriate for me to comment on the merits of individual cases because doing so could prejudice the decision-making process. As with planning decisions, which are comparable in nature, offshore oil and gas projects are subject to a robust and legally-grounded regulatory framework under which information submitted by developers must be carefully assessed. In both the Jackdaw and Rosebank cases, the Secretary of State will make a decision on whether to agree to these being consented in due course. It is imperative that all relevant material is properly considered so that decisions are sound, defensible and robust. When reaching a view, the Secretary of State will assess the overall balance between any potential significant environmental effects and the wider benefits to the interests of the country. As Members would expect, that assessment will involve considering a range of factors, which may include energy security, alongside environmental considerations.

Some have asked why the decisions are taking time. The answer is straightforward: these are planning-type decisions that must be taken in full knowledge of the facts. The guidance on the assessment of scope 3 emissions, published last year in response to the Supreme Court’s judgment, is the first of its kind, and it is therefore crucial that we take the time to apply it properly. [Interruption.] It serves no one’s interest for decisions to be rushed—it certainly does not serve the industry or the constituents of the right hon. Member for Beverley and Holderness (Graham Stuart), who is chuntering from a sedentary position—only for it to be overturned later by the courts, which was the mess that the previous Government got into.

[Peter Swallow (Bracknell) (Lab)]

The Minister mentioned energy security. Of course, that is fundamentally the most important issue facing us as a country at the moment, not only because of the conflict in the middle east, but wider conflicts, including that in Ukraine. Is it not the case that we must stop taking short-term decisions and instead look to the long-term future of our energy so that we can get nationally controlled energy security, which is good for our national security, too?

[Martin McCluskey]

My hon. Friend makes an important point that gets to the heart of this debate. We are not going to learn the wrong lessons from the current situation in the middle east. We will not make ourselves more reliant on fossil fuels, at a time when we can see playing out day after day in all our constituencies the effect—rising prices—of being overly reliant and exposed to gas and fossil fuels.

We are incredibly fortunate to have the North sea on our doorstep. For almost half a century, the oil and gas buried there has fuelled development and charged our economy. But for too long, Governments have ignored the transition happening before their eyes. We owe it to the North sea’s workers and communities, which have done so much for our country, to set out a proper plan for their future and to seize the immense potential in clean energy.

[Stephen Flynn]

The workers who the Minister is referring to have a very different take from his own on his Government’s approach to the North sea. Indeed, I think they would be incredulous at the arguments he is making today and that his Government have made over many months, because it is costing them their jobs. He knows that moving from the energy profits levy to the oil and gas price mechanism as quickly as possible will give those workers some hope and will help assist with energy security. Is he or his Department currently in discussions with the Treasury about making that happen?

[Martin McCluskey]

The Chancellor has had discussions with industry and will continue to do so, and that is the right and appropriate way to conduct these decisions. I was pleased to be in Aberdeen a couple of weeks ago talking to the same workers that the right hon. Member mentions. Of course, we need to do as much as possible to ensure that oil and gas workers are properly protected through this transition, but we must not lose sight of the great potential, for example, in floating offshore wind, which will also provide a significant future for his constituents and people across Scotland.

As I was saying, the transition that is under way is the only way to get off the rollercoaster of fossil fuels and build a more secure energy system. Following a consultation with businesses and communities last autumn, we set out the steps we are taking to unleash the North sea’s clean energy future. That plan recognises our world-class energy workers and supply chains and the importance of supporting them through that transition.

[Graham Stuart]

The Minister has been most generous in giving way. He will know that Harbour Energy was the single largest producer in the North sea—it is leaving. He will know that it has been devastating for so many workers in the industry. He will also know that, by all projections, in 2050 this country will still be dependent on oil and gas in all scenarios. Yet, by not doing new licences, we will by definition be more dependent on foreign supply, much of it having to come through the strait of Hormuz. How can that make any sense? I do not think the Minister thinks it does, but I suppose he is forced to stand on his feet and repeat the nonsense that comes out of the mouth of his Secretary of State.

[Martin McCluskey]

I am more than capable of forming my own conclusions, and what is in this speech are my own conclusions. I encourage the right hon. Gentleman to listen to what I have had to say throughout this speech. Harbour Energy is continuing to operate. He talks about dependence. The dependence that we see at the moment is dependence on fossil fuels and on oil and gas, which has left every single one of our constituents across this House exposed to volatile oil and gas prices and to higher prices. As I said in response to my hon. Friend the Member for Bracknell (Peter Swallow), the only way out of that is to get off this rollercoaster of fossil fuels and on to home-grown energy where we can control the price. That is a responsible action from a Government who are focused on the long term and not the short term.

[Dr Murrison]

Offshore Energies UK does not agree. It said that at the current rate of the Government crashing the North sea industry, we will be three times more reliant on gas by 2035 than we are at the moment. Is the Minister right or is Offshore Energies UK right?

[Martin McCluskey]

I will say to the right hon. Gentleman what I said to his Front Benchers last week: the Conservatives need to stop talking down the North sea. With 1.1 million barrels a day being extracted, that is not an industry being shut down; that is an industry continuing to produce.

Just last week, the Minister for Energy met our North Sea future board in Aberdeen with representatives from industry, unions and local groups to discuss how we can drive a fair, orderly and prosperous transition. Net zero is the economic opportunity of the century—

[Richard Tice]

Madness!

[Martin McCluskey]

That is despite what the hon. Member for Boston and Skegness (Richard Tice) might say. This Government will ensure that our oil and gas workers can take advantage of that opportunity while driving for energy sovereignty and abundance with clean home-grown power.

[Several hon. Members rose—]