Oil and gas vote is a political boost for PM – but won’t help our energy needs

Published

1 year ago

January 23, 2024

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The passing of the Offshore Petroleum Licensing Bill to its next stage is good news for Rishi Sunak.

MPs gave the bill a second reading by 293 votes to 211 on Monday evening, with the government securing a majority of 82.

The prime minister is a man, remember, who said he wants to “max out” drilling for North Sea oil and gas.

There’s been outcry, of course, from environmentalists, the clean energy industry, his political rivals and even some within his party.

But anger at the bill plays into the hands of Mr Sunak. Because it’s not really about energy security at all, but politics.

Number 10 is banking on using strong rhetoric around the continued need for oil and gas as part of its strategy of being “honest” with the public about the reality of ambitious net zero targets.

A strategy it hopes will win votes among those who’ve read headlines about the costs of a net zero transition and angry about protests by people like Just Stop Oil.

Others, including some Conservatives, argue it’s more cynical than that – an attempt to foment a “culture war” around net zero and the economic and social upheaval it will bring, to win a few much-needed votes in the next election.

Trivial gains

Now the government does have a point on the need for locally sourced natural gas.

Not a lot of campaigners like to admit this, but about 80% of the UK’s energy still comes from fossil fuels – most of it now gas. Even today, half the gas we use domestically is produced in the North Sea.

But does that mean the Offshore Petroleum Licensing Bill is going to help with that?

In short, no. The additional gas a new licensing regime might yield is trivial.

Yet there’s plenty of anti-net zero sounding rhetoric coming from the government.

Energy Secretary Claire Coutinho told the Commons on Monday evening that those opposing the bill are “putting the interests of extreme climate ideologues over the interests of ordinary workers”.

Yet despite talk of “maxing out” the North Sea, the government says it remains committed to an economy-wide transition to low carbon energy that climate science says is necessary and also inevitable.

All the more reason, argues the government, that it supports the oil and gas industry. The bill, it claims, will protect 200,000 jobs directly and indirectly connected to the offshore fossil fuel industry.

And it is true, many of these jobs are the highly skilled ones that will be needed in the transition to low-carbon energy. Building a floating offshore wind turbine is very similar to building a floating oil platform.

Only oil industry experts – including Lord Browne, the former CEO of BP – have pointed out tweaks to oil licensing won’t help secure those jobs.

The industry is in decline anyway. The only way to protect jobs is with a meaningful shift in support for the low-carbon economy.

Loud shouting

The government is funding a switch to renewables – including offshore in the North Sea. But, in the absence of a coherent energy strategy, the fossil fuel rhetoric really doesn’t help accelerate the clean transition it says it wants.

Companies wanting to invest in in low-carbon alternatives in the UK hardly see themselves as “extreme climate ideologues”.

By shouting louder about the need for locally produced fossil fuels, than the need to support low carbon energy it makes the UK look like a less reliable place to invest.

What of the Opposition? Despite having more of the facts laid out above on its side, Labour is also making political capital by opposing the bill – arguing it’s the only party that can deliver a transition that’s fair for workers.

But it’s going to have problems of its own delivering that if it finds itself in government later this year.

Hundreds of thousands of jobs in the fossil fuel economy from offshore workers to gas and heating engineers will need to “transition”.

But unions, many representing those too close to retirement to retrain to install wind farms or heat pumps, won’t support that enthusiastically.

Either way, playing politics with net zero isn’t going to help. The energy transition in the North Sea is happening anyway – the one all parties want to see is one that preserves as many jobs as will be inevitably lost as the oil and gas reservoirs decline.

That requires a coherent, costed and bold plan to manage what some see as the biggest economic and societal upheaval since the industrial revolution.

Most energy experts agree no political party is presenting us with one of those at the moment.

Business

Spending review 2025: The key announcements

Published

21 hours ago

June 11, 2025

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Spending review 2025: The key announcements

Rachel Reeves is setting out her spending review in the House of Commons.

It outlines how much funding individual government departments will receive over the next three years and state infrastructure investment for the next four years.

The last spending review took place during the COVID-19 pandemic, and before that, in 2015.

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Here’s what’s been announced so far – please refresh this page for updates.

Defence

A major recipient of funds is the Ministry of Defence. Defence spending will rise from 2.3% of gross domestic product (GDP) to 2.6% by 2027. An £11bn uplift and a £600 million uplift for security and intelligence agencies.

Within that there’ll be £4.5bn of investment in munitions made in Glasgow and more than £6bn to upgrade to nuclear submarine production.

Border security

The chancellor goes onto border security, where she says funding will increase with up to £280m more per year by the end of the spending review for the new Border Security Command.

She said the Home Secretary Yvette Cooper will end the costly use of hotels to house asylum seekers by 2029.

The chancellor says funding she has announced today, including from the transformation fund, will also cut the asylum backlog, see more appeal cases heard and “return people who have no right to be here”.

This will save the taxpayer £1bn a year, she says.

Energy

The biggest nuclear building programme for half a century has been announced with £14.2bn being poured into the Sizewell C nuclear power station on the Suffolk coastline.

A total of £14bn will go to the Sizewell C nuclear power plant. Another £2.5bn will be invested in a new small modular reactor programme.

A commitment to nuclear was reiterated, with £30bn allocated.

Science and technology

Moving on from energy and infrastructure, the chancellor says she wants the country’s high tech industries in Britain to continue to lead the world in the years to come.

Research and development funding will go to a record high of £22bn a year by the end of the spending period.

The government’s artificial intelligence action plan will receive £2bn.

Housing

Government funding of social and affordable housing has been allocated £39bn – which she called the “biggest cash injection into social housing in 50 years”.

She says she is providing an additional £10bn for financial investments, including to be delivered through Homes England, to help unlock hundreds of thousands more homes.

Transport

The chancellor announced £15bn for new rail, tram and bus networks across the West Midlands and the North. She’s also green-lit a new rail line between Liverpool and Manchester.

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Spending review: More cash for schools, NHS and defence expected as chancellor unveils plans

Published

1 day ago

June 11, 2025

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Spending review: More cash for schools, NHS and defence expected as chancellor unveils plans

The chancellor will unveil the spending review at lunchtime – with plans to invest billions of pounds across the UK.

However, Rachel Reeves will admit that “too many people” are yet to feel the benefits of the government’s work so far.

In the House of Commons, she will confirm the budgets for each government department over the next three years – with boosts expected for schools, defence and the NHS.

Ms Reeves will vow to spend vast sums of money across the country to “ensure that renewal is felt in people’s everyday lives, their jobs, their communities”.

She is also pledging to set out “reforms that will guarantee towns and cities outside London and the South East can benefit from new investment”.

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Ms Reeves is expected to say: “This government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.

“This government’s task – my task – and the purpose of this spending review – is to change that … So that people can see a doctor when they need one. Know that they are secure at work. And feel safe on their local high street.

“The priorities in this spending review are the priorities of working people. To invest in our country’s security, health and economy so working people all over our country are better off.”

Watch live coverage of the spending review on Sky News from 12pm

Ms Reeves will formally confirm “the biggest-ever local transport infrastructure investment in England’s city regions” – worth £15.6bn – as well as £86bn to “boost science and technology”, including by building the Sizewell C nuclear power station.

She will also announce the extension of the £3 cap on bus fares, Sky News understands. The cap – which Labour lifted from £2 – was due to expire at the end of this year.

Meanwhile, £39bn for a new Affordable Homes Programme over the next 10 years is set to be unveiled, with the government seeking to ramp up housebuilding to hit its manifesto pledge of 1.5 million new homes by the end of this parliament.

The chancellor will argue: “The choices in this spending review are possible only because of the stability I have introduced and the choices I took in the autumn.”

One of those choices included cutting the winter fuel allowance for almost all pensioners – a decision the government has now U-turned on at a cost of £1.25bn. However, she is not expected to explain where that money will come from until the budget this autumn.

Ms Reeves will tell MPs: “I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.

“These are my choices. These are this government’s choices. These are the British people’s choices.”

But shadow chancellor Sir Mel Stride said this will be “the ‘spend today, tax tomorrow’ spending review” – arguing that the government is “spending money it doesn’t have, with no credible plan to pay for it”.

He said in a statement: “Rachel Reeves talks about ‘hard choices’ – but her real choice has been to take the easy road. Spend more, borrow more, and cross her fingers. This spending review won’t be a plan for the future – it will be a dangerous gamble with Britain’s economic stability.”

He went on: “Today, we’ll hear slogans, spin and self-congratulation – but not the truth. Don’t be fooled. Behind the spin lies a dangerous economic gamble that risks the country’s financial future.”

Business

Jobless rate above predicted peak as budget tax hikes kick in

Published

2 days ago

June 10, 2025

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Jobless rate above predicted peak as budget tax hikes kick in

The UK’s jobless rate ticked up to 4.6% in April while payrolled employment has fallen sharply since, according to official figures covering the period when budget tax hikes on businesses came into effect.

The Office for National Statistics (ONS) said the new unemployment rate covering the three months to April was the highest since July 2021.

It had previously stood at 4.5% – a total of more than 1.6 million people.

At 4.6%, it is above the peak level predicted for this year, just in March, by the Office for Budget Responsibility.

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Figures from the taxman also highlighted by the ONS showed the number of people in payrolled employment during May fell by 109,000 – double April’s revised figure of 55,000 and the biggest monthly drop in five years.

The ONS Labour Force Survey data was the first to cover April’s rises in employer national insurance contributions and the national living wage – hikes to costs for businesses which lobby groups had warned would result in job losses, price rises and lower wage settlements.

The ONS figures showed average weekly earnings, excluding the effects of bonuses, over the three months to April were weaker, from a downwardly revised 5.5% to 5.2% year on year.

Liz McKeown, ONS director of economic statistics, said: “There continues to be weakening in the labour market, with the number of people on payroll falling notably.

“Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.”

The ONS data piles more pressure on Chancellor Rachel Reeves, just a day after she confirmed her winter fuel U-turn would cost £1.25bn.

She has consistently defenced her budget, arguing the taxes on business were a one-off necessary evil to account for a £22bn “black hole” in the public finances inherited from the last government.

Employment minister Alison McGovern said in response to the data: “Six months after we launched Get Britain Working, we are already seeing the benefits with economic activity at a record high, with 500,000 more people in employment since we entered office and real wages growing more since July than in the decade after 2010.

“People all over the country are benefiting from increased training opportunities and the newly launched Jobs and Careers Service will allow us to test new and innovative approaches to personalise employment support.”

Despite the wage figure easing, that 5.2% level remains comfortably ahead of the 3.5% rate of the pace of price growth – inflation.

The curb to consumer spending power will be welcomed by the Bank of England as its rate-setters continue to fret that strong wage growth represents an inflation risk ahead.

The ONS figures did little to boost financial market expectations of a further rate cut next month.

LSEG data showed 90% of market participants believed there would be no no change – with just one further cut this year being fully priced in.