Plan to expand North Sea oil drilling announced – as critics slam Rishi Sunak’s ‘culture war on climate’

Published

2 years ago

July 31, 2023

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The prime minister has announced an expansion of oil and gas drilling in the North Sea amid ongoing rows in his party over the future of its climate commitments.

Number 10 said hundreds of new oil and gas licences will be granted off the coast of Scotland to “boost British energy independence” and “reduce reliance on hostile states”.

The move puts down a marker between the government and Labour, which has proposed a block on all domestic new oil and gas drilling as part of its strategy to achieve zero-carbon electricity by 2030.

Shadow climate change secretary Ed Miliband accused Rishi Sunak of lurching towards “a culture war on climate” to make up for “13 years of failed Tory energy policy”.

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But Mr Sunak and his ministers have stressed the need to use North Sea fossil fuel resources, especially since the Russian invasion of Ukraine.

The North Sea Transition Authority (NSTA), which is responsible for regulating the oil, gas and carbon storage industries, is currently running the 33rd offshore oil and gas licensing round, and they expect to award more than 100 new licenses in the autumn.

But such moves have prompted alarm from climate campaigners, with the government already facing opposition to any development of Rosebank, 80 miles northwest of Shetland.

The head of Oxfam Scotland, Jamie Livingstone, called the new licensing rounds a “short-sighted and selfish decision by the UK government” which “flies in the face of climate science and common sense”.

He added: “The UN has made clear that we must end our global addiction to fossil fuels, so this decision sends a wrecking ball through the UK’s climate commitments.”

The prime minister has also confirmed locations for two new carbon capture usage and storage clusters ahead of a visit to Aberdeenshire today – where he is expected to announce multi-million pound funding for the schemes.

Carbon capture sees polluting fumes collected to either be used elsewhere or stored underground instead of going into the air, and is seen as an increasingly important tool in achieving net zero.

The Acorn carbon capture project in North East Scotland – a joint venture between Shell and other firms – and the Viking project in the Humber will be “vital to driving forward and investing in clean technologies that we need to realise our net zero target”, Downing Street said.

But while ministers predict the move could support up to 50,000 jobs, the target for the two new sites to be up and running isn’t until 2030.

‘We’re choosing to power up Britain’

Ahead of his visit to Scotland, Mr Sunak said: “We have all witnessed how Putin has manipulated and weaponised energy – disrupting supply and stalling growth in countries around the world.

“Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses.

“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas.

“But there are those who would rather that it come from hostile states than from the supplies we have here at home.

“We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon-intensive gas imports from overseas – which will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy.”

SNP Westminster leader Stephen Flynn said it was right to be “conscious of energy security” and keeping the large oil and gas workforce in Scotland employed, calling it a “silly position” to end all drilling.

But speaking to Sky News, he did not give his full support to the new licenses, saying Tory plans to “take every single drop” from the North Sea was “a little bit morally bankrupt”.

He added: “We need to be conscious of the fact that every single drop of oil or indeed a molecule of gas that we take out of the North Sea will have a concurrent impact on climate change.”

Mr Flynn called for “robust climate compatibility checkpoints” to be put in place for any new licenses.

Meanwhile, Labour’s Mr Miliband questioned whether the prime minister was the right person to make the decisions over future energy security.

“Every family and business is paying the price, in higher energy bills,” he said. “It is absurd that having left this country so exposed, the Conservative Party is asking the public to believe they can fix it.

“And it’s telling that while Labour focuses on lower bills and good jobs, Rishi Sunak lurches desperately towards a culture war on climate to appease his split party, losing track of what he believes from day to day, depending on which faction he’s met with.

“It’s no way to govern and it’s costing working people.”

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A new green dividing line in politics?

The move comes as both main parties continue to argue over their commitment to key net zero policies and environmental promises.

The Conservatives’ narrow victory in the Uxbridge and South Ruislip by-election opened a can of worms within Labour over London Mayor Sadiq Khan’s plan to expand the Ultra Low Emission Zone (ULEZ) to outer boroughs – something Sir Keir Starmer blamed for the loss.

The Labour leader and Mr Khan are continuing to hold discussions over the extension, with Sir Keir calling on his colleague to “reflect” on the impact on voters.

But Mr Khan has stood by the decision on the basis it will improve air quality for five million people in London.

Meanwhile, MPs on the right of the Conservative Party are appealing to the PM to rethink the government’s net zero commitments in light of the win, with calls for delays to a number of targets – including putting back the ban on the sale of petrol and diesel cars from 2030 to 2035.

Former Tory leader Sir Iain Duncan Smith – who was among 43 signatories to a letter urging Mr Sunak to look again at the plan – told Sky News the date was “plucked out of nowhere”, adding: “If you want to get them to clean emissions, you’ve got to do it in a way that still keeps our industry going in the UK.”

The prime minister insisted on Sunday the 2030 deadline would remain, but did announce plans for a review of low traffic neighbourhoods (LTNs), saying he was on the side of drivers.

Downing Street has confirmed ministers are scrutinising existing pledges “in light of some of the cost of living challenges”, as the prime minister promised a “proportionate and pragmatic” approach to net zero.

The prime minister is also set to meet industry leaders and workers while in Scotland.

The government pledged that, along with energy authorities, it would “go further than before in announcing continued decisive action to boost the capability of the North Sea industry to transition towards net zero, strengthen the foundations of the UK’s future energy mix and create the next generation of highly skilled green jobs”.

Grant Shapps, the energy security secretary, is also expected to meet figures from the oil and gas, renewable and nuclear industries over the coming week as the Conservatives focus their campaign on the topic.

Mr Shapps said: “In the wake of Putin’s barbaric invasion of Ukraine, our energy security is more important than ever.

“The North Sea is at the heart of our plan to power up Britain from Britain so that tyrants like Putin can never again use energy as a weapon to blackmail us.

“Today’s commitment to power ahead with new oil and gas licences will drive forward our energy independence and our economy for generations.”

Business

AA owners line up banks to steer path towards £4.5bn exit

Published

7 hours ago

May 24, 2025

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AA owners line up banks to steer path towards £4.5bn exit

The owners of the AA, Britain’s biggest breakdown recovery service, are lining up bankers to steer a path towards a sale or stock market listing next year which could value the company at well over £4bn.

Sky News has learnt that JP Morgan and Rothschild are in pole position to be appointed to conduct a review of the AA’s strategic options following a recovery in its financial and operating performance.

The AA, which has more than 16 million customers, including 3.3 million individual members, is jointly owned by three private equity firms: Towerbrook Capital Partners, Warburg Pincus and Stonepeak.

Insiders said this weekend that any form of corporate transaction involving the AA was not imminent or likely to take place for at least 12 months.

They added that there was no fixed timetable and that a deal might not take place until after 2026.

Nevertheless, the impending appointment of advisers underlines the renewed confidence its shareholders now have in its prospects, with the business having recorded four consecutive years of customer, revenue and earnings growth.

A strategic review of the AA’s options is likely to encompass an outright sale, listing on the public markets or the disposal of a further minority stake.

Stonepeak invested £450m into the company in a combination of common and preferred equity, in a transaction which completed in July last year.

That deal was undertaken at an enterprise valuation – comprising the AA’s equity and debt – of approximately £4bn, the shareholders said at the time.

Given the company’s growth and the valuation at which Stonepeak invested, any future transaction would be unlikely to take place with a price of less than £4.5bn, according to bankers.

The AA, which has a large insurance division as well as its roadside recovery operations, remains weighed down by a substantial – albeit declining – debt burden.

Its most recent set of financial results disclosed that it had £1.9bn of net debt, which it is gradually paying down as profitability improves.

AA owners over the years

The company has been through a succession of owners during the last 25 years.

In 1999, it was bought by Centrica, the owner of British Gas, for £1.1bn.

It was then sold five years later to CVC Capital Partners and Permira, two buyout firms, for £1.75bn, and sat under the corporate umbrella Acromas alongside Saga for a decade.

The AA listed on the London Stock Exchange in 2014, but its shares endured a miserable run, being taken private nearly seven years later at little more than 15% of its value on flotation.

Under the ownership of Towerbrook and Warburg Pincus, the company embarked on a long-term transformation plan, recruiting a new leadership team in the form of chairman Rick Haythornthwaite – who also chairs NatWest Group – and chief executive Jakob Pfaudler.

For many years, the AA styled itself as “Britain’s fourth emergency service”, competing with fierce rival the RAC for market share in the breakdown recovery sector.

Founded in 1905 by a quartet of driving enthusiasts, the AA passed 100,000 members in 1934, before reaching the one million mark in 1950.

Last year, it attended 3.5 million breakdowns on Britain’s roads, with 2,700 patrols wearing its uniform.

The company also operates the largest driving school business in the UK under the AA and BSM brands.

In the past, it has explored a sale of its insurance arm, which also has millions of customers, at various points but is not actively doing so now.

By recruiting a third major shareholder last, the AA mirrored a deal struck in 2021 by the RAC.

The RAC’s then owners – CVC Capital Partners and the Singaporean state fund GIC – brought the technology-focused private equity firm, Silver Lake, in as another major investor.

A spokesman for the AA declined to comment on Saturday.

Business

US-EU trade war fears reignite as Europe strikes back at Trump’s threat

Published

14 hours ago

May 24, 2025

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US-EU trade war fears reignite as Europe strikes back at Trump's threat

Fears of a US-EU trade war have been reignited after Europe refused to back down in the face of fresh threats from Donald Trump.

The word tariff has dominated much of the US president’s second term, and he has repeatedly and freely threatened countries with them.

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This included the so-called “liberation day” last month, where he unleashed tariffs on many of his trade partners.

On Friday, after a period of relative calm which has included striking a deal with the UK, he threatened to impose a 50% tariff on the EU after claiming trade talks with Brussels were “going nowhere”.

The US president has repeatedly taken issue with the EU, going as far as to claim it was created to rip the US off.

However, in the face of the latest hostile rhetoric from Mr Trump’s social media account, the European Commission – which oversees trade for the 27-country bloc – has refused to back down.

EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.

“We stand ready to defend our interests.”

Fellow EU leaders and ministers have also held the line after Mr Trump’s comments.

Polish deputy economy minister Michal Baranowski said the tariffs appeared to be a negotiating ploy, with Dutch deputy prime minister Dick Schoof said tariffs “can go up and down”.

French trade minister Laurent Saint-Martin said the latest threats did nothing to help trade talks.

He stressed “de-escalation” was one of the EU’s main aims but warned: “We are ready to respond.”

Mr Sefcovic spoke with US trade representative Jamieson Greer and commerce secretary Howard Lutnick after Mr Trump’s comments.

Mr Trump has previously backed down on a tit-for-tat trade war with China, which saw tariffs soar above 100%.

Sticking points

Talks between the US and EU have stumbled.

In the past week, Washington sent a list of demands to Brussels – including adopting US food safety standards and removing national digital services taxes, people familiar with the talks told Reuters news agency.

In response, the EU reportedly offered a mutually beneficial deal that could include the bloc potentially buying more liquefied natural gas and soybeans from the US, as well as cooperation on issues such as steel overcapacity, which both sides blame on China.

Stocks tumble as Trump grumbles

Major stock indices tumbled after Mr Trump’s comments, which came as he also threatened to slap US tech giant Apple with a 25% tariff.

The president is adamant that he wants the company’s iPhones to be built in America.

The vast majority of its phones are made in China, and the company has also shifted some production to India.

Shares of Apple ended 3% lower and the dollar sank 1% versus the Japanese yen and the euro rose 0.8% against the dollar.

Business

British taxpayers’ £10.2bn loss on bailout of RBS

Published

21 hours ago

May 23, 2025

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British taxpayers' £10.2bn loss on bailout of RBS

British taxpayers are set to swallow a loss of just over £10bn on the 2008 rescue of Royal Bank of Scotland (RBS) as the government prepares to confirm that it has offloaded its last-remaining shares in the lender as soon as next week.

Sky News can reveal the ultimate cost to the UK of saving RBS – now NatWest Group – from insolvency is expected to come in at about £10.2bn once the proceeds of share sales, dividends and fees associated with the stake are aggregated.

The final bill will draw a line under one of the most notorious bank bailouts ever orchestrated, and comes nearly 17 years after the then chancellor, Lord Darling, conducted what RBS’s boss at the time, Fred Goodwin, labelled “a drive-by shooting”.

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Insiders believe a statement confirming the final shares have been sold could come in the latter part of next week, although there is a chance that timetable could be extended by a number of days.

The chancellor, Rachel Reeves, is likely to make a statement about the milestone, although insiders say the Treasury and the bank are keen to simply mark the occasion by thanking British taxpayers for their protracted support.

A stock exchange filing disclosing that taxpayers’ stake had fallen below 1% was made last week, down from over 80% in the years after the £45.5bn bailout.

The stake now stands at 0.26%, meaning the final shares could be offloaded as early as the middle of next week, depending upon demand.

Total proceeds from a government trading plan launched in 2021 to drip-feed NatWest stock into the market have so far reached £12.8bn.

Based on the bank’s current share price, the remaining shares should fetch in the region of £400m, taking the figure to £13.2bn.

In addition, institutional share sales and direct buybacks by NatWest of government-held stock have yielded a further £11.5bn.

Dividend payments to the Treasury during its ownership have totalled £4.9bn, while fees and other payments have generated another £5.6bn.

In aggregate, that means total proceeds from NatWest since 2008 are expected to hit £35.3bn.

Under Rick Haythornthwaite and Paul Thwaite, now the bank’s chairman and chief executive respectively, NatWest is now focused on driving growth across its business.

It recently tabled an £11bn bid to buy Santander UK, according to the Financial Times, although no talks are ongoing.

Mr Thwaite replaced Dame Alison Rose, who left amid the crisis sparked by the debanking scandal involving Nigel Farage, the Reform UK leader.

Sky News recently revealed that the bank and Mr Farage had reached an undisclosed settlement.

During the first five years of NatWest’s period in majority state ownership, the bank was run by Sir Stephen Hester, now the chairman of easyJet.

Sir Stephen stepped down amid tensions with the then chancellor, George Osborne, about how RBS – as it then was – should be run.

Lloyds Banking Group was also in partial state ownership for years, although taxpayers reaped a net gain of about £900m from that period.

Other lenders nationalised during the crisis included Bradford & Bingley, the bulk of which was sold to Santander UK, and Northern Rock, part of which was sold to Virgin Money – which in turn has been acquired by Nationwide.

NatWest declined to comment on Friday.

A Treasury spokesperson said: “We now own less than 1% of shares in NatWest which is a significant step towards returning the bank to private ownership and delivering value for money for taxpayers.

“We are on track to exit the shareholding soon, subject to sales achieving value for money and market conditions.”