In the recent UK general election, Kier Starmer’s Labour Party won a landslide victory, ending the Conservatives’ 14 years in power and ushering in what appears to be a complete change in how the UK generates and uses its energy.
The UK’s two main political parties, which have swapped the reins of power for the past 80 years, have demonstrated vastly differing views on oil and gas exploration in the North Sea, which has formed the basis of the UK’s energy production for decades.
While the Conservative Party intended to issue new exploration licences annually, Labour pledged to stop doing so, potentially decreasing employment in the North Sea and Scotland as fields dry up and companies look for new opportunities.
The Labour Party has said it won’t revoke any existing licences for exploration.
Starmer has promised to stop issuing new licences for North Sea exploration, but what will happen to current production licences is unclear. The Labour Party has not given further information about any possible legal issues related to companies recently granted licences after paying for and carrying out exploration research.
However, businesses are still unsure about what happens to these operations during the oil and gas production process, as they would need to apply separately for “another licence as part of that phase”, according to independent think tank Green Alliance’s senior policy analyst Heather Plumpton.
Throughout the UK election campaign, Starmer assured voters that transitioning to a greener economy would not result in job losses. However, his oil licensing pledges have highlighted a potential employment crisis as Labour fails to provide definitive answers about the impact on industry workers.
Parallels with the UK’s coal industry
Stephen Flynn, the Scottish Nationalist Party’s Westminster leader, has criticised Labour’s North Sea energy plans for the oil and gas sector, arguing the proposal for a fossil fuel windfall tax on companies would eventually lead to 100,000 job losses, a claim that several industry players have questioned.
Labour plans to hike the tax on fossil fuel companies from 75% of excess profits to 78%, as well as extend the policy until 2029.
However, could Labour’s plans for the North Sea lead to a situation reminiscent of the 1980s miners’ strikes during the tenure of then-Prime Minister Margaret Thatcher?
Thatcher, first elected in 1979, saw trade unions as an obstacle to economic growth within the UK, and throughout the early 1980s passed legislation to limit their power, such as requiring balloting of members and limiting secondary picketing.
In March 1984, significant industrial action began to occur in the British coal industry to oppose the closure of around 20 mines that the government considered “uneconomical”. This led to large-scale industrial action until March 1985.
The pit closures, which were expected to result in 20,000 job losses, prompted around three-quarters of the country’s 187,000 miners to go on strike, the BBC reported. Following the end of the strike, which the National Union of Mineworkers eventually called off, a wave of pit closures ensued, leading to the shutdown of almost all of the UK’s underground deep coal mines within the next two decades.
In 1992 alone, 32 additional pit closures were announced as gas became the favoured fuel for power stations.
According to Sheffield Hallam University, the UK coal industry as a whole employed around 221,000 workers when the strike began, but there were fewer than 7,000 employees by March 2005. The UK’s last deep coal mine, Kellingley Colliery in North Yorkshire, ceased operations in December 2015.
Could there be a repeat of 1984?
For the past 40 years, parts of Scotland and the North East of England have had access to well-paid, secure jobs provided by North Sea oil – but now those regions face an uncertain future.
Analysts have warned that if Labour’s policies are poorly implemented or the transition process mismanaged, employment chaos within the sector could result. This would compound existing concerns about the economy and parallel the structural and industrial challenges Thatcher’s government faced.
Studies over the past 30 years show that various initiatives have been implemented to improve the economic conditions in coal mining and other post-industrial communities hit hardest by the move away from coal. However, despite funding being made available for local communities, many regions of the north of England were hit hard, with unemployment staying above the national average for several years after the strike was called off.
“It is absolutely vital the [job losses in the North Sea and Scotland] don’t become a repeat of the miners’ crisis of the 1980s,” said Plumpton, before adding: “I think there is a slight difference here: we have one industry in decline and other potential industries on the rise.”
Regarding accusations that Labour could kill up to 100,000 jobs in the sector, Plumpton also confirmed to Offshore Technology that the job losses are just a “geological reality of the North Sea, and means it is a declining industry and jobs are disappearing”.
She mentioned that despite the next government’s policy on licensing, the region has seen a consistent increase in job losses in recent years, with more than 8,000 jobs having disappeared in the past decade alone.
However, Plumpton also noted the possibility of a significant increase in clean energy jobs over the next decade, at least partially offsetting potential losses in the oil and gas sector.
Balancing job losses and job gains
Offshore Energies UK (OEUK) estimates that the offshore oil and gas sector employed 200,800 individuals in the UK in 2021, around 22,300 more than in 2020.
GlobalData, Offshore Technology’s parent company, says the oil and gas industry employs an estimated 150,000–200,000 workers, largely in the east and north-east of the UK along the North Sea coast.
However, gradually falling production levels are likely to prompt at least some job losses.
As per government data, diminishing investment in the extraction of oil and gas in the North Sea has been pushing the UK’s production into a decline for at least a decade.
The decline in investment in the mature North Sea basin prompted production to reach its lowest point since 1999 in the third quarter of 2023, when total production stood at 23.2 million tonnes of oil equivalent.
Projections from Robert Gordon University, Aberdeen, indicate a decline in North Sea jobs by up to 30,000, 20% higher than the government’s projection. According to Uplift UK, which supports “a rapid and fair UK transition away from oil and gas production”, argues that despite the government granting hundreds of licences over the past decade, the number of jobs supported by oil and gas has still decreased by more than 50%.
However, employment in clean energy industries could also be on the rise.
According to the solar energy company Green Switch Capital, a large player in the UK’s onshore and offshore wind market, Scotland has the highest proportion of ‘green’ jobs, at 3.3%, a rise from 1.7% last year.
However, Plumpton has cited the security of these jobs as an important issue. Moreover, it also needs to considered whether workers have the necessary skills to transition to where the jobs are located, she added.
According to the Green Alliance analyst, the next government would have to address the policy gaps quickly, involving workers, industry and the government itself, to retain any jobs lost in the North Sea.
Reacting to Labour’s pledge that no jobs would be lost in the oil industry, she said: “You can’t expect people to magically transfer across. You need coordination, planning and support for training. It is one thing to say something like no jobs [will be] lost, but another to deliver policy to [ensure] that happens in reality.”
In its party manifesto, Labour announced its Green Prosperity Plan, a partnership with businesses through the National Wealth Fund that promises to “create 650,000 jobs across the country by 2030”.
However, there weren’t any “specific commitments on that”, Plumpton said. “They have said positive things, but I don’t know the details of [Labour’s] policy planning.”
Transitioning from conventional energy sectors to sustainable industries poses intricate problems for policymakers, industry players and workers. Despite legitimate worries about job cuts, the emergence of clean energy sectors does offer fresh employment opportunities.
However, the focus should be on ensuring that workers have the essential skills to adapt to the changing job landscape, a task the Labour Party may take years to accomplish.
