North Sea Oil and Gas Workers: Transitional Support

Debate between Michael Shanks and Barry Gardiner

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.

[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.

Rosebank and Jackdaw Oilfields

Debate between Michael Shanks and Barry Gardiner

Monday 10th February 2025 Commons Chamber

[Michael Shanks]

I gently say to the hon. Lady that it has nothing whatsoever to do with ideology—[Interruption.] It is about the Government responding to a legal judgment of a court—not just the Court of Session in this particular case, but the Supreme Court—on a decision taken by the previous Government to grant consent unlawfully. We now have to respond to that Supreme Court judgment and ensure that any future application process is robust and does not end up in the courts again—that is what we are determined to do. It will be for individual applicants to bring forward their applications.

On the wider point on jobs, I am acutely aware of the importance of ensuring that there is certainty in the north-east of Scotland. I have spent a lot of time in this job making an effort to get to know not just the individual companies, but the supply chains, support companies and those on apprenticeships that work in the north-east. It is important to me, as it is to the hon. Lady, but I say to her and her whole party that we cannot move forward simply saying that oil and gas is the only future for the north-east of Scotland. They are finite resources, and we are clearly saying that the balance requires us to start investing now in the transition, so that there are good well-paid jobs for many generations to come.

[Barry Gardiner (Brent West) (Lab)]

I welcome what my hon. Friend has said about the importance of the just transition and the need to move gradually to renewables. He quoted from our party’s manifesto that

“We will not issue new licences to explore new fields,”

but I remind him that there was another part to that paragraph. It says:

“because”

—there was a reason for it—

“they will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis.”

Can he confirm that the 3 million oil barrels that would come out of Rosebank would in fact not take a penny off bills, cannot make us energy secure and would only worsen the climate crisis?

[Michael Shanks]

We have outlined in the seven months we have been in government our determination to deliver the energy security that this country has lacked in the past 14 years. The previous Government displayed a lack of preparedness not just for our energy security in future, but for the bills—higher than ever before—that all our constituents paid and that led to the cost of living crisis. That was because the Conservatives were happy to have us at the casino of fossil fuel prices. We are determined that that will not be our future and that we will no longer be in thrall to petrostates and dictators. Even though very little of our gas comes from those countries, we remain vulnerable to the prices set by international markets. We are determined that that will not happen, and we are building the clean power system that will take us away from it.

Biomass Generation

Debate between Michael Shanks and Barry Gardiner

Monday 10th February 2025 Commons Chamber

[Michael Shanks]

Transparency is important, so I am very happy to publish what we can. Elements of that analysis, such as details of how Drax runs its power station, will be commercially sensitive, so I will have to look at exactly what can be published. I know that NESO has today published a summary of its advice, to give clarity on its view on the security of supply questions. I am happy to take the hon. Gentleman’s point away and write to him.

[Barry Gardiner (Brent West) (Lab)]

Drax has exploited UK taxpayers for far too long. It has lied about meeting sustainability rules, burned 1 million tonnes of wood from primary forests, gagged whistleblowers with non-disclosure agreements, and pretended that it could sequester carbon from replanted forests in time to meet our 2050 targets. Today, the Government have brought that a stop. They have debunked Drax’s lies, cut its subsidy, and set a clear and sensible exit strategy that will maintain security of supply. After 15 years of campaigning, I welcome this breakthrough for honesty and common sense.

Will the Minister now look at the role of Ofgem in all of this? Just this weekend, when it was informed of the other break in proper reporting of sustainability, it replied, “That is the same issue as we’ve dealt with before.” What would he say if a policeman said that about a serial murderer?

[Michael Shanks]

On the start of my hon. Friend’s question, I agree. This Government were deeply concerned about sustainability practices at Drax and, frankly, about the level of subsidy that was part of the deal negotiated by the previous Government. We inherited a dire situation in terms of long-term planning for our energy security. What we have sought to do with this deal is answer all those questions—on sustainability, on security of supply, on excess profits and on the role of Drax in the system for dispatchable power, which is important.

On the role of Ofgem, I know that the audit of some of Drax’s practices is still under way. I am rightly not privy to the details of that, because it is Ofgem’s review, but we have a wider review of the role and remit of Ofgem under way at the moment, and I think that would be an opportunity for my hon. Friend to feed in his thoughts on the future of Ofgem.

Making Britain a Clean Energy Superpower

Debate between Michael Shanks and Barry Gardiner

Friday 26th July 2024 Commons Chamber

[Michael Shanks]

Again, I thank my hon. Friend not just for his intervention, but for all the work he has done before and since his election. He has been a dedicated campaigner on this issue and has raised it a number of times with me and my right hon. Friend the Secretary of State.

My hon. Friend’s point about collaboration is incredibly important. We have reset our relations with the devolved Administrations across the country. In particular, on Grangemouth, we have been working hard with the Scottish Government to find a solution. That has been a far more helpful set of interventions than we had from the previous Government. For example, on Project Willow, we have committed to joint funding with the Scottish Government to drive forward to find a solution. We are leaving no stone unturned to secure an industrial future for the Grangemouth site, and I know that my hon. Friend will continue to campaign on the issue.

The future of the North sea more generally depends on having a plan for the industries of the future, whether that is carbon capture and storage, hydrogen or, indeed, renewables. The just transition is critical and it is something I take incredibly seriously, so we will work with North sea communities to develop a credible long-term plan. That work will be supported by a British jobs bonus to incentivise developers to build their supply chains here in the UK and to create good jobs in our industrial heartlands and coastal communities. We will make sure that our offshore workers are the people who decarbonise our country and deliver our energy independence, and that there is a strong, resilient workforce in the North sea for decades to come.

[Barry Gardiner (Brent West) (Lab)]

My hon. Friend, very importantly, mentioned the role that carbon capture, usage and storage has to play in the decarbonisation of our economy. I am sure he will have seen the latest National Audit Office report on CCUS and will therefore be aware that the Department has increased its reliance on CCUS substantially since this was first mooted. The NAO is clear in its report that uncertainty remains about the funding available for future stages of the CCUS project proposals; that the previous Government were behind in agreeing support for track 1; and that future progress on the programme is dependent on reaching financial investment decisions for at least some of the track 1 projects very swiftly. Will he give us an update—if not now, at some point later—on how this essential part of the programme will be handled?

[Michael Shanks]

My hon. Friend raises a very important point. The Department is reviewing the NAO report at the moment. This area will need investment, but we also need a concerted effort to understand what some of the barriers are. It is very clear that carbon capture and storage will be a critical part of the North sea infrastructure in the future, so we are taking those issues very seriously.