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Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the future of the North Sea oil and gas industry.
The Minister for Energy (Michael Shanks)
The North sea will be at the heart of Britain’s energy future. For decades its workers, business and communities have helped to power our country and our world, and they will do so for decades to come. The oil and gas industry has lost around a third of its entire workforce in the last decade as oil and gas production has declined. A plan is now needed. That is why in March we consulted on a framework for building a world-leading offshore clean energy industry in the North sea, alongside managing existing oil and gas fields for their lifespan. We will respond to that consultation in the coming weeks.
Alongside that, we published our clean energy jobs plan, which sets out that over 400,000 more good jobs are to be created across the UK, including 40,000 in Scotland, by the end of the decade. That is facilitated thanks to record investments in clean energy as well as over £50 billion of private investment since July 2024 thanks to the certainty our plans have created.
Turning to today’s news, colleagues will be aware that Petrofac Ltd has for some time been working on a restructure relating to its global portfolio. The restructuring plan failed, following the unexpected termination of a contract by TenneT—a Dutch transmission company. At 7 am today, holding company Petrofac Ltd announced that it will be entering administration. While that is obviously disappointing for the company, it is the product of long-standing issues with its global business.
Contrary to misleading reports today, the UK arm of Petrofac has not entered administration and is continuing to operate as normal—as an in-demand business with a highly skilled workforce and many successful contracts. Indeed, only last month Petrofac’s UK arm extended two significant contracts, demonstrating that the business has a viable future. Today’s announcement covers only the top-level holding company Petrofac Ltd, which has no employees. The Petrofac group has faced long-standing challenges, including a high-profile £77 million financial penalty imposed in 2021 following a Serious Fraud Office investigation into bribery.
We understand that there is reason to be optimistic about a commercial resolution that includes the UK arm. The Government have been, and will remain, in close contact with the company. I repeat this to the House: the UK business has not entered administration. It is successful and growing, and it will continue to operate as normal.
Andrew Bowie
Another week and yet another hammer blow to our North sea oil and gas industry, another gut punch to energy workers and another blow to our energy security. Whatever the Minister says today, the blame lies squarely with this Labour Government. [Interruption.] They do not like to hear it, but it is true.
Today, the energy giant Petrofac has entered administration, casting doubt over the future of its 2,000 employees in Scotland—as its global headquarters is in Aberdeen—and the countless more who are supported indirectly through the supply chain. As the Minister said, this company has had issues for many years, but the hostile environment in the UK continental shelf created by the Government has made operating here nigh on impossible for far too many companies.
Our offshore energy industry has seen thousands of redundancies since the 2024 general election. Harbour Energy completed a new round of redundancies just last month and, with depressing regularity, we hear of more job losses in the North sea. Whether at Harbour Energy, Apache, Hunting or Petrofac, each job lost means uncertainty for a family, a mortgage jeopardised, investment fleeing our communities and our world-class supply chains and skilled workforce pushed towards extinction.
How many more will it take for the Secretary of State to change course? These are political choices. This is a manufactured decline. As a direct result of the hostile trading environment, the “closed for business” sign is hanging over the UK continental shelf. From the energy profits levy extension increase to the ban on new licences and the refusal to defend the Government’s decision on Rosebank and Jackdaw, the odds are stacked against the North sea industry, damaging the business environment, threatening investment, harming our economy and undermining our energy security. These are political choices that have resulted in job losses.
What steps are being taken to support Petrofac’s HQ employees in Aberdeen? How many more jobs have to be lost across the industry for the Government to change course? When will the thousands of jobs promised through GB Energy for Aberdeen and around the United Kingdom materialise? Will the Minister personally act and ask his boss—the Secretary of State for Energy—to change course, or is he content to sacrifice Aberdeen, the north-east and our energy industry on this vainglorious campaign to destroy our fossil fuel industry?
Michael Shanks
On Petrofac, the hon. Gentleman should be careful with his tone. To come here and try to undermine efforts to find a buyer for the UK arm and to talk down a business, which, as I just outlined, is a successful and growing business in the North sea, is deeply irresponsible. There have been long-standing issues at the company; he of all people should be well aware of that, given his previous role as a Minister in the Department for Energy Security and Net Zero. All of us across the House have a responsibility to support the company at the moment, not to undermine it, and to send a positive message to those workers, the suppliers and the customers that the UK arm is continuing to operate as normal. All the signs are that there is a viable long-term future for the company, but that will not happen if we have comments like those made by the hon. Gentleman undermining that business.
On the wider question of the North sea, the hon. Gentleman should know as well as anyone that we lost over a third of the jobs in the North sea during the Conservative party’s time in government. He wants to pretend that the transition arrived in July 2024, but he was in government when those jobs were going, and the Conservatives failed time and again to come up with any credible plan for managing the future of the North sea. We will not do that. We will come up with a plan. That is why we are building the industries of the future on hydrogen, on carbon capture, on offshore wind and on the supply chains—the very investments that he and Conservative Members turn their backs against time and again. They are turning their backs on the future of the energy story in the North sea as they are more interested in exploiting problems than solving them. Time and again, they have learned no lessons from their time in government, when they left these workers without a credible plan. We will not do the same again.
Patricia Ferguson (Glasgow West) (Lab)
Will my hon. Friend outline to the House how the Government are delivering the clean energy jobs plan, which will see 40,000 new jobs in the clean energy industries in Scotland by 2030? I am sure that move will be welcomed around the Chamber. Will he advise us what support will be given to that plan by the Scottish Government?
Michael Shanks
My hon. Friend makes an important point about building up the industries of the future. I have said on a number of occasions that we should rightly be proud of six decades of oil and gas in the north-east of Scotland, and we should be proud of the work that that workforce has achieved, but we should also recognise that we have been in transition for a long time. Building up the jobs of the future in carbon capture, hydrogen, offshore wind and supply chains is how we ensure a long-term, viable, sustainable future in the north-east—alongside oil and gas for many decades to come.
The particular work that the Scottish Government need to do in this space is about improving the skills offer so that more of Scotland’s young people can take up the 40,000 jobs we will create over the coming years. That is a huge opportunity for Scotland’s young people, but only if we improve Scotland’s education system.
Pippa Heylings (South Cambridgeshire) (LD)
This is worrying news. Petrofac is one of the North sea’s largest offshore contractors, but it is entering administration today after years of financial difficulty. While I cannot share the desire of the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) to ditch the Climate Change Act 2008, I do share his concern for those 2,000 jobs in Scotland and those workers who face uncertainty about their future, so the Secretary of State must act swiftly to find a sustainable path forward, hopefully secure a buyer and safeguard those skilled jobs.
This underlines why the Liberal Democrats have called for an independent just transition commission, putting oil and gas workers and local communities front and centre. It was good to see the much-awaited publication of the Government’s clean energy jobs plan last week. However, we know that job creation is not happening fast enough to keep up with job losses in the North sea, so can the Secretary of State and the Minister confirm what will be done to fill that gap in the meantime—in the short term—and to deliver a genuinely just transition that keeps those skilled workers powering Britain’s clean energy future?
Michael Shanks
First, can I just say what a contrast it is when someone rightly responds to this concerning issue in a serious way and does not talk down the industry? This is where the House should stand taller and recognise that that company is doing good work and that there are 2,000 workers out in the North sea right now carrying out their duties. We want to ensure that there is a viable future for the company, and we are doing everything that we can in that space. All the signs are that it is a growing, successful business, and we should recognise that and talk it up, not talk it down, as the Conservative party seems hellbent on doing.
On the hon. Lady’s wider point, she is right to say that the future of clean energy involves tens of thousands of jobs across Scotland and hundreds of thousands across the UK, but that we need to ramp those jobs up as quickly as possible and ensure that people can achieve those jobs. We are doing what we can around looking at the skills framework, but we also ensuring that, through the investments we are making through Great British Energy, those jobs come forward much faster and that people are supported to move from jobs in oil and gas into jobs that have a real correlation in skills. We are picking this work up after the failure of the previous Government to have any plan. We are moving as fast as we can, and we will see more on that North sea plan in the coming weeks.
Torcuil Crichton (Na h-Eileanan an Iar) (Lab)
I have to say that this is a very underpowered urgent question. It is similar to a two-stroke engine attached to a rowing boat—[Interruption.]
Mr Speaker
Order. When I decide on an urgent question, I do not need to be questioned about how urgent it is, or whether it is like a two-stroke engine or a 50 cc—actually, some of us think it might be a three litre.
Torcuil Crichton
I was, of course, referring to the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), who knows full well that he has missed the story here. Petrofac went into administration because the Dutch Government cut a contract for offshore wind farm developments. I dare say that that raises concerns about the viability for finance and the supply chain for the offshore wind farm industry, but as the Minister has pointed out, and as the shadow Minister well knows, Petrofac is successful in the UK. It has 2,000 jobs in the UK and it has contracts in the UK, so we need less scaremongering from this underpowered Opposition and more assurance from the Minister that he will look after those jobs.
Michael Shanks
I will just reflect on something that my hon. Friend said. This is a global company, and it has not had its troubles to seek for some time. It was subject to an investigation back in 2017, and it has gone through a number of restructuring routes since then. Ultimately, that process came to an end when it lost a significant contract from TenneT, one of the Dutch transmission operators. This is a company that has faced global headwinds for some time, but I repeat to the House that the UK business has a viable long-term future. It is already growing, it is successful, and we have a responsibility across this House to talk up British businesses and the workers in those jobs, not to talk them down.
Stephen Flynn (Aberdeen South) (SNP)
May I convey in the strongest possible terms to the junior Minister the anger and anxiety that is felt by my constituents in Aberdeen? Right now they are providing energy security to each and every one of us on these isles, as well as revenue to his Treasury, yet their only reward, and the only certainty they seem to have on this Government’s watch, is that of looming job losses. May I ask—[Interruption.] He shakes his head. May I ask him to come to Aberdeen and explain to my constituents when he is going to listen to the trade unions, the academics, the workers and the industry and protect that industry, not only for our energy security but for Scotland’s economy?
Michael Shanks
I am in Aberdeen regularly and do meet constituents of the right hon. Member who work in renewables, carbon capture and hydrogen as well as in oil and gas. It is his constituents who will benefit from the investments that Great British Energy will make, for example, which he failed to vote for, and who tell me that after a long period of having no credible plan—[Interruption.] He can shout me down all he wants; he asked a question—
Mr Speaker
Order. I brought the right hon. Member for Aberdeen South (Stephen Flynn) in early because I thought that was right for his constituents and because he had applied for an UQ, but I do expect a little respect, even if he does not like the answer.
Michael Shanks
The right hon. Member asks a serious question, and I am trying to give him an answer, if he would but listen for a few moments. We take the issue of job losses seriously—of course we do—but we have to recognise that over 70,000 jobs have been lost over the past 10 years because there has not been a credible plan on the future of the North sea. We are going to deliver that alongside new jobs in the energy future.
I also say to the right hon. Member that I am somewhat confused what the SNP’s policy is on this because, as far as I understood it, it is exactly the same as this Government’s policy, which is to look at the licensing position. If he is telling us now that the SNP’s position has changed, that is news to me and, I suspect, to the House, but of course, the SNP has not published the draft energy strategy, which has been in draft form for two years, so it is hard for anyone to know.
Ms Polly Billington (East Thanet) (Lab)
What steps is the Minister taking to ensure that the UK arm of the company, which is an in-demand business with a highly skilled workforce and many successful contracts, has a long-term future in the UK, particularly in the context of our clean energy jobs plan announced last week and, as my hon. Friend the Member for Na h-Eileanan an Iar (Torcuil Crichton) pointed out, some of the risks around the development of offshore wind in Holland?
Michael Shanks
We have obviously been liaising with the company over quite a long period of time on the restructuring; indeed, the previous Government did as well. We have been looking at this issue and will continue to work very closely with the company to ensure that there is a viable long-term future for the UK part. But it is an in-demand business and, as I said just last month, it expanded some of its contracts, which shows that it is successful. Of course, it has a highly skilled workforce working in a huge range of jobs right across oil and gas.
The wider question about investment into renewables is also one that we should take seriously. We have a huge opportunity in the United Kingdom to capitalise on the economic opportunities that come from offshore and onshore wind, hydrogen and carbon capture, but that requires consistency and a view that the UK is a safe place to invest—things that were threatened by the Conservatives.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
Anyone who has met businesses in Aberdeen will know that they rely on the oil and gas sector. This Labour Government’s “net zero at all costs” policy is a disaster for high-quality skills and jobs in the north-east and across Scotland. What urgent action will the Government take to restore confidence and stability in the energy sector?
Michael Shanks
I reject the hon. Member’s assertion that this Government are somehow following a course without looking at the evidence. Clearly, oil and gas is a crucial part of our energy mix and will be for decades to come—we have been clear on that—but so too is building up what comes next. That means investing in the supply chains that were so often not part of the building of infrastructure that we have in our waters. We towed things in and switched them on, but had none of the jobs that went with them. We are determined to change that, but that comes with having a credible industrial strategy and a long-term plan for the future of the North sea, which we did not have under 14 years of the previous Government.
Brian Leishman (Alloa and Grangemouth) (Ind)
Incredibly, it is now eight months since the Prime Minister announced £200 million from the National Wealth Fund for the industrial future of Grangemouth. I have had meetings with numerous companies that have proposals and are, frankly, impatient to get started. When will this money be spent, and when will those jobs come to my town? All there is to show for it so far are the bones of an unjust transition and industrial devastation.
Michael Shanks
We have been looking at a number of proposals. I met the five companies that are the frontrunners for National Wealth Fund investment, along with the Scottish Government Energy Minister. A number of propositions are to be taken forward, and I hope we will have an announcement to make in due course. Of course, we have been trying not to just spend £200 million on the first thing that comes along but to find the genuinely long-term, viable industrial opportunities that deliver jobs at Grangemouth, not just for a year or two but long into the future. The hon. Gentleman is right that for far too long the site has been the victim of a lack of planning, and it is an example of a just transition done wrongly. We want to make that different by having a serious plan for long-term jobs on the site. The NWF has brought companies to the table, and we will deliver an announcement on that in due course.
Christine Jardine (Edinburgh West) (LD)
I accept the Minister’s comments about Petrofac, but it is a very worrying day not just for the 2,000 workers whose jobs are at stake but for the entire oil economy in north-east Scotland. Two things are missing that we desperately need in Scotland: one is investment in the jobs and skills that we will need for the renewable industries the Minister talks about, and the other is the reform of the taxation system and the windfall tax to ensure that it is consistent for the North sea area. What are the Government going to do about those things?
Michael Shanks
The hon. Lady is of course right that any announcements like this are worrying not only for those directly involved but for the wider community. I entirely recognise that point. She is right that it is critical to invest in the jobs of the future. We have worked with the Scottish Government—because we do work with them—to deliver joint funding for transition support so that workers can get the direct skills support they need to move from an oil and gas job into a renewables job. That is really important, but we also need to see much more upskilling of the next generation, who can take advantage of the jobs we will create in the clean energies of the future. On the question of taxation, I am afraid that is a matter for the Chancellor.
Graeme Downie (Dunfermline and Dollar) (Lab)
My constituency includes small and medium-sized enterprises and large businesses that work in renewables, oil and gas, solar, onshore wind and offshore wind. Does the Minister agree that some of the outbursts today from Opposition Members, both Conservative and SNP, will do nothing but undermine confidence for those companies? Furthermore, can he please reassure me that he is working extensively with colleges and employers in Scotland to ensure that we see a skills transition from oil and gas into renewables, so that people in my constituency can take full opportunity of the investments that the Government are making?
Michael Shanks
My hon. Friend is absolutely right that huge opportunities are coming. I have said that we should be proud of the history of oil and gas, and we should also be really proud of what the industry is doing to transition into the future. We need to do much more to ensure that jobs are delivered now, but certainty and confidence that the plan is not going to change overnight is critical for how we get private sector investment into the UK to deliver on those jobs. That is also why it is so important that we look at skills in the round.
I have to say that, despite the outbursts today, the SNP in Holyrood and the UK Government are working closely on ensuring that the skills opportunities are delivered. Would I like that to go further? Of course I would, and I hope we will have a change of Government and can make that happen. This only works if we have a serious approach to recognising the challenges, building the jobs of the future and ensuring that people can take advantage of the opportunities right across Scotland.
Harriet Cross (Gordon and Buchan) (Con)
We urgently need to restore confidence and stability in our oil and gas sector, or we will be here again and again as more and more businesses suffer and more and more jobs are lost, whether in my constituency, across north-east Scotland, in Scotland as a whole or in the UK as a whole—there are oil and gas and energy jobs everywhere in the UK. The future of Petrofac’s 2,000 skilled and expert staff, as well as the indirect jobs that rely on them, are now at risk and reliant on Petrofac being able to find a buyer for its North sea assets. Does the Minister think that the job of finding a buyer has been made more or less likely, given that the Government have created, in the industry’s words, “the most unstable fiscal” environment “in the world”?
Michael Shanks
I have enormous respect for the hon. Lady, but I have to say that this is not the day to be talking down this particular company. She can make the wider points about this Government’s policy—I totally recognise that—but this is a hugely important moment in which not to undermine a successful and growing company. We need to ensure that the suppliers, related companies and customers of Petrofac continue to support that business, because as of today it is operating as normal. It is incumbent on us all to ensure that that continues to be the case. We are working closely with the company to ensure that that outcome is delivered—the hon. Lady is right to mention the wider impact—but those 2,000 jobs and the supply chain jobs that rely on them have continued as normal today, and any suggestion to the contrary is just not correct.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
Does my hon. Friend agree that it is important to speak responsibly, with care and accuracy, about the successful UK arm of Petrofac? To do otherwise will only serve to undermine the business and job security that we all want to see across the House. What steps is he taking to ensure that it has a long-term future in the UK?
Michael Shanks
I rightly expect to be challenged in the House on the Government’s policies. A strong back-and-forth exchange is important. In this one instance, however, and separate from any view that Members might have on the wider policies of this Government, it is important that we come together where we can and say that this is a strong, successful, growing company. It is in all our interests across the House to talk up the importance of that company’s continuing to be successful so that a buyer or another commercial resolution is found and those jobs can be maintained. That is surely in all our interests.
Kirsty Blackman (Aberdeen North) (SNP)
Every single one of us has been criticising Government policy, not criticising Petrofac, the expertise and workers at Petrofac, or any of the workers in our oil and gas industry. The Minister says that he has been spending time in Aberdeen. Does he have any idea how it feels to be in Aberdeen just now, with another hammer blow coming? And it is because of the Government’s policies; it is because there is this massive gap. Skilled workers in the oil and gas industry will just go abroad; they will go elsewhere. It does not matter whether we retrain them; the jobs are not there for them right now. What is he going to do to plug that gap? What will he do to keep these skilled workers in Scotland, in Aberdeen and in these islands, and not drive them away?
Michael Shanks
I take the hon. Lady’s first point with a pinch of salt, after her second point that this comes as a hammer blow to the community. There is no hammer blow; those jobs have been protected—today 2,000 workers are waking up and doing the same job they were doing last week.
I am often in Aberdeen but I do not pretend that I hear as much from people there as the hon. Lady does from her constituents. Although I have made an effort to be there as often as possible to hear the concerns, I recognise that we need to move further and faster than the previous Government did for 14 years, and the Scottish Government did for 18 years, to put a credible plan in place for the future of those jobs. That means not only investing in future jobs, but ensuring the processes are in place so that people can take advantage of those jobs much more easily. Passporting, which was stuck in the mud for years, is now being delivered because we helped to unlock it. There is a lot more to do, and we will say that in the coming weeks when we publish our future of the North sea plan, but we are the ones driving forward investment that creates the jobs of the future. I am afraid that other parties—I did not count the hon. Lady’s party as one of those until today—are harking back to the past rather than recognising that the jobs of the future need to go hand in hand with good, well-paid oil and gas jobs in the short term.
Dr Scott Arthur (Edinburgh South West) (Lab)
I thank the Minister for his statement and the confidence that he is showing in those workers. We have heard from the SNP. The difference between Labour and the SNP just now is that the SNP wants to scrap the energy profits levy but does not know what it will replace it with other than something that is fairer. Does the Minister think that is the kind of leadership we need in the oil and gas sector?
Michael Shanks
We recognise that the energy profits levy will come to an end and have consulted on what the future of that looks like with industry. It is a matter for the Chancellor to outline tax policy, as is standard practice in this House; it is not for me to comment on that. But there is a broader question about how we ensure that we drive forward investment. Talking down the investment in carbon capture, hydrogen, offshore wind and the supply chains is not the way to drive forward the jobs of the future, alongside the critical, important oil and gas jobs that will be with us for decades to come.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
Why does the Minister refuse to issue new licences for the exploitation of new gas fields and new oil fields in the North sea? That is what the industry would like, and that is what the country would like, because we would like a stronger balance of payments, more tax revenues for the Exchequer, and a future for the North sea oil industry. What is the point of choking off our own North sea oil and gas industry when we have to import those fuels from other countries?
Michael Shanks
We will respond to the consultation on the future of licensing in due course. This Government were elected on the manifesto commitment to not issue new licences to explore new fields, but it remains our position that we will support existing licences and fields for their lifetime. We must manage the future of the basin, which has been in decline for 20-plus years—we hit peak oil in 1999 and peak oil in 2000, so we have been in transition for a long time—and that means investing in the industries that come next, alongside oil and gas.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I am reassured that it is this Minister who is looking at the issue and fighting for those jobs in Aberdeen. I am acutely aware that the previous Government did not take full account of the impact of this situation. We now know that using Rosebank, which the shadow Minister raised, would create 50 times more climate-harming gases than the previous Government admitted, and that the climate crisis is one of the biggest drags on growth. I know that the Minister is committed, in common with all Labour Members, to protecting jobs and the planet, but what more can we do within our supply chains to support his work in getting growth and the just transition that this country desperately needs, without Rosebank?
Michael Shanks
The House will understand that I will not be drawn on applications that are currently awaiting decision, so I will not comment on that specific application. On my hon. Friend’s broader point, as has already been said, the net zero economy is growing three times faster than the economy at large, and it is our economic future. I recently attended the G20 in South Africa, where Ministers from across the world were talking about the opportunities offered by the clean power transition in their own countries. It is the economic opportunity of the 21st century, as well as how we deliver on climate leadership: contrary to what Opposition Members might now think, that still matters. It is only right that we deliver a genuinely just transition for the workers who have powered our country for the past 60 years. We have seen where transitions have not been done well. The previous Government failed to put in place any kind of plan, but we will deliver a plan that delivers a just transition and our economic future.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
I hear the Minister’s reassuring words, but surely he can understand the worry of the workers waking up this morning to the news that they heard. It is not just warm words that are causing the problem: it is policy, the energy profits levy and the ban on exploration. It is not just me saying that: those who are concerned include the Port of Aberdeen, Robert Gordon University, the North Sea Transition Authority, the Tony Blair Institute for Global Change and the Scottish Affairs Committee. What will the Minister do to address these policy problems?
Michael Shanks
I thank the hon. Gentleman for his tone and I accept the point that he makes. As I have said, we can be clear that there is a viable future for those 2,000 workers and we should be positive about that—it is important that we talk up the future potential of the company—but I recognise that that does nothing for those who might be worrying. We accept that the EPL will come to an end. We have consulted with industry on what the future of that looks like. We want to ensure that the Treasury gains value from price spikes, a point on which his party and mine agree, and that is a matter for the Chancellor to take forward. If he is in favour of a tax cut for oil and gas, it is important that he says where that significant amount of revenue will come from to fund the public services on which he and I rely.
Mary Glindon (Newcastle upon Tyne East and Wallsend) (Lab)
I welcome the Government’s mention of tiebacks in a consultation earlier this year. The development of tiebacks is important because it reduces costs and extends the life of existing critical infrastructure. However, many existing hubs are reaching the end of their life and we may miss the opportunities that are in front of us. Will the Minister look at tiebacks as a pragmatic step to help aid the transition?
Michael Shanks
My hon. Friend is always a great champion for the industry. Although we often talk, quite rightly, about Aberdeen and north-east Scotland, she is right to champion her own community, where there are a significant number of oil and gas workers. I always welcome her straightforward challenge to me on many points. I will not get into the detail of the response to the consultation, which we will publish in due course, but we have been clear that we want a credible, long-term plan for the future of the North sea. That is why we consulted on a range of factors, not just the future licensing position, and we will come to a pragmatic position on what the future of the North sea looks like.
Sir Julian Lewis (New Forest East) (Con)
For how many years, in the Government’s estimation, will we have to keep importing foreign oil and gas, as a result of not being allowed fully to exploit our own supplies?
Michael Shanks
Perhaps I should switch the question back: for how many years have we already been importing oil and gas? That gets us to the fundamental point. The Conservatives want to pretend that in July last year, we switched to being a net importer of oil and gas. That is not what happened. The right hon. Gentleman’s party oversaw that transition over many, many years. I recognise that, to some degree, given the geology of the basin, there would not have been different decisions taken if we had been in government, but what we could have done differently was ensure that the transition was happening, and delivered the economic opportunities that come along with what comes next, and that is what we will do.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
Does the Minister share my concerns about Reform and the Conservatives denying the reality of climate change, and denying that the best way to protect people’s jobs, including energy jobs, is to follow the green jobs plan? Does he agree that nuclear, including as Heysham 1 and 2 in my constituency—and, if I get my way, new nuclear at Heysham—is vital to the clean energy jobs plan?
Michael Shanks
I was going to say that that might be a note of consensus across the House, but I remembered that the SNP has an ideological objection to nuclear in Scotland, so it will not benefit from the economic opportunities that come from thousands of well-paid, skilled and trade-unionised jobs in nuclear. We believe that there is a long-term future for nuclear, which is why we announced funding for Sizewell C, concluded the small modular reactor programme, and have been working with the US Government to bring forward private funding partnerships to build the latest technology in the UK. That comes with thousands of jobs, will help us to deliver on energy security long into the future, and helps to tackle the climate crisis. This party believes that the climate crisis is an existential threat, and we should do everything that we can to tackle it.
Richard Tice (Boston and Skegness) (Reform)
Thousands more jobs are at risk, alongside the thousands of families and jobs at risk at the Lindsey oil refinery in Lincolnshire, all because of this Government’s policies on net stupid zero, yet the Minister talks warmly about the growth prospects for Petrofac. To grow, we need an industry; to have an industry, we need more oil and gas licences. Will the Minister change course and allow exploration and more licences to produce oil and gas in the North sea?
Michael Shanks
I am not sure that there was a hugely coherent argument there. The hon. Gentleman seems to say that the future might be in clean energy jobs, but he says, “They might not be delivered fast enough, so we should not bother doing it.” We think there is an important long-term future in delivering clean energy, including in his constituency, where many supply chain jobs will be delivered, and he is against that economic investment. He should explain to his constituents and to the wider country why Reform wants to make this country more energy-dependent, not less energy-dependent, and why it is against the economic opportunities that our proposals bring. Even if we disagree on the climate crisis—which I find staggering, given all the evidence; I accept that he might be burying his head in the sand—we should at least agree that there is a huge economic opportunity, and an opportunity to maintain our energy security.
Alice Macdonald (Norwich North) (Lab/Co-op)
I recently visited the Bacton gas terminal in the constituency of the hon. Member for North Norfolk (Steff Aquarone), which is on the North sea coast. It already provides up to one third of our nation’s gas supply, and is ideally placed to be a carbon capture and hydrogen hub. The Minister has just talked about jobs; I want those jobs in my area. Will he recognise the vital role that the east of England plays, back Bacton’s plans to ensure its low-carbon future, and help to secure good, local jobs?
Michael Shanks
My hon. Friend is right to highlight that this is a huge opportunity, which the previous Government talked about a lot but did not actually move forward on delivering. In the spending review, there were significant amounts of investment to move forward with the carbon capture clusters, and we have followed that up with specific investments over the past few months. I have been privileged to visit some of the sites and see the potential for maintaining existing jobs in industry while building the jobs of the future in carbon capture. We are hugely positive about the future vision for carbon capture across the country, as a way to tackle our emissions, help us get to net zero, and create good industrial jobs.
Martin Vickers (Brigg and Immingham) (Con)
I thank the Minister for the engagement we have had over the future of Lindsey oil refinery in my constituency. Can he give any indication of what support the Government might give, and when a final decision might be taken? Will he at least acknowledge that new licences in the North sea would offer job opportunities for those people whose jobs are at risk?
Michael Shanks
I thank the hon. Gentleman for the engagement we have had on this issue. Obviously, the failure of the company that was previously running the Prax Lindsey oil refinery has had a really significant impact. We have been working to make sure that the process that the official receiver is going through is concluded as soon as possible. It is for the receiver to decide who the potential buyers are; it is looking at a shortlist of credible candidates, but given the nature of the insolvency, it is not for the Government to decide what is built next on that site.
Turning to the hon. Gentleman’s second point, I genuinely do not think that the licensing question will decide the future of jobs for that site. We want to build up an industry for the future on that site, with long-term, sustainable jobs, and all the evidence we have seen about managing the future of the North sea basin suggests that that while oil and gas will be important for many years to come, that is not the long-term future for the North sea.
Matt Rodda (Reading Central) (Lab)
It is very important to increase the number of skilled jobs in renewables and in hydrogen. I welcome the Minister’s mention of the Government’s clean jobs plan; can he say more about that plan, and in particular about training and development for younger staff, as well as retraining for existing staff?
Michael Shanks
I thank my hon. Friend for his question, and particularly for mentioning retraining. We see huge opportunities for people who are in the middle of careers to transfer into the energy system. Just in the past few weeks, we have been looking at a scheme to support veterans who are leaving the armed forces in getting jobs building infrastructure. There are huge opportunities in that sector if we can capitalise on the clean energy transition.
We also need to invest in the future of the next generation of workers. In England, we are looking at technical training colleges to make that happen. Funding goes to the Scottish Government to do that in Scotland and, of course, to the Welsh Government as well. The future of our energy system is clean energy; we want to make sure that we have the jobs and training opportunities that go with it, so that the people of our country get an economic advantage, as well as the country getting the energy security.
Dr Ellie Chowns (North Herefordshire) (Green)
Today’s Petrofac news has nothing to do with UK oil and gas policy. This is a company with a long history of financial challenges and mismanagement; it was fined millions for bribery, lost £6 billion in value since 2012, and has now lost a contract with the Netherlands. Does the Minister agree that any attempt to claim otherwise is blatant political point scoring by the Tories and others with a head-in-the-sand climate denial agenda, and is a distraction from what really matters, which is ensuring that every worker whose job is affected by today’s news is properly supported?
Michael Shanks
I agree with the hon. Lady on the wider point, which is that—as I outlined in my opening answer—Petrofac has not had its troubles to seek. She has outlined a number of those troubles, but I reiterate that the UK arm of that business is successful and growing. We want to make sure that that continues—that there is a buyer, or another solution, so that it can continue long into the future. Others will seek to politicise this news for the sake of their own political narratives, but it is incumbent on all of us to send as positive a message as we can to the workers, suppliers and customers of Petrofac—the message that the UK arm continues to operate as normal, and that we want that to continue.
Graham Stuart (Beverley and Holderness) (Con)
Every month, 1,000-plus people lose their jobs in North sea oil and gas. Contrary to the case that the Minister presents, the industry says that this declining basin still has 4 billion additional barrels that could be extracted, if only there were new licences. He tells the House that that oil and gas will be needed for decades to come, yet he cuts off all new supply, mortally damaging the whole supply chain, of which Petrofac is part. The Minister cannot deny responsibility, and he needs to persuade the Chancellor—if not his Secretary of State, who is probably beyond persuasion—that we need to move to a practical policy that includes new licences. We need to optimise this, because green and fossil fuels do not need to be in tension; we want the transition, but we must keep those jobs for now.
Michael Shanks
First, I welcome the right hon. Gentleman’s recognition—which we seldom hear from his party’s Front Benchers these days—that this is a transition, and that we want the economic opportunities of oil and gas and those of renewables. It is a delight to hear him say that; his Front Benchers should say so more often and talk up the phenomenal renewables industry, which the Conservatives should take a bit of credit for. Over the past 14 years, they built up so much of that industry across the country, but they have turned away from that now.
Turning to the licensing point, I cannot remember at what stage the right hon. Gentleman was in the Government, but of course, the previous Government said that they would not issue new licences. Later, they briefly did; then they recognised that that was the wrong policy—I think it was the Liz Truss years in which they changed around. A tiny fraction of the licences that have been issued have ever resulted in extraction from the North sea. We will manage existing licences for their lifespan, and will take a pragmatic view on the future of the North sea, which we will announce in the coming weeks, but the long-term future of the North sea does not lie in oil and gas; it lies in renewables, carbon capture and hydrogen.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
Does the Minister really consider this a just transition? We have thousands of contractors arriving in the highlands. They stay in workers’ camps, and very few legacy houses are agreed. The companies are not employing local people, and this is all in an area with the greatest fuel poverty in Britain.
Michael Shanks
We know that winter has come when the hon. Gentleman turns up in his lovely knitted jumpers; it is a pleasure to see them back again. He and I have had a number of conversations on this issue, and I recognise how seriously he takes it. There have been some good moves recently to look at the legacy left behind, particularly housing. This is about building housing that suits the workforce, but can be left behind for communities afterwards. We need a lot of work in partnership with the Scottish Government, who have responsibility for housing policy, to make sure that the opportunities are taken forward. The Minister for energy consumers, my hon. Friend the Member for Inverclyde and Renfrewshire West (Martin McCluskey), will say much more in due course about our plan for warm homes. That will result in significant spending in Scotland, but that will be in the hands of the Scottish Government, who have cut this budget time and again. I hope that they will change their ways, and will help the hon. Gentleman’s constituents to have warmer homes this winter.
Sir Desmond Swayne (New Forest West) (Con)
Has the Minister made any estimate of the likely impact on Petrofac and similar enterprises of the extension of the energy profits levy?
Michael Shanks
As I have said in a number of answers, the UK arm of Petrofac is a successful and growing business. Its holding company went into administration today due to a number of factors, including the loss of an international contract. It is nothing to do with our policy in the North sea.
Mark Pritchard (The Wrekin) (Con)
I say to our colleagues on the Green green Benches that of course climate change exists. We need green investment, green jobs and the green transition, but is there not a fundamental flaw at the heart of the Government’s policy, which is that it is ideologically driven? Have we not learned anything from Russia’s invasion of Ukraine about energy security, energy sovereignty and energy independence? I put it to the Minister, with the greatest respect, that in the medium to long term, if we continue down this track too quickly, without a stable transition for workers and the energy sector, the Government could end up undermining the UK’s national security.
Michael Shanks
I thank the right hon. Gentleman for how he has put the question. Energy security is at the heart of what we are trying to do, because our exposure to fossil fuels is what led to some of the most significant price spikes in all our constituents’ bills—spikes that they still face today. Our continued exposure to the impact of Russia’s invasion of Ukraine—even though none of that Russian gas now reaches us—is because of the international markets; they drive this forward. The only way to take back control of our energy is by building the clean power system of the future, and the pace of that transition is absolutely right. We are driving forward momentum, to make sure that the investment comes forward to create jobs in the economy right now. That has been successful; there has been £50 billion of private investment just in the past year. My view is that 10 or 20 years ago, both under the previous Labour Government and under the Conservative Government, we should have recognised that a transition was under way and put in place a credible plan for protecting the jobs. That was not done, but we are determined to do it, so that the transition for oil and gas workers is into good, well-paid jobs in renewables, carbon capture, hydrogen and other technologies, and we have a genuinely just and prosperous transition.
Llinos Medi (Ynys Môn) (PC)
Job losses in the North sea come from the lack of a strategic energy transition plan. The same applies to nuclear in Wales, where the lack of a plan for Wylfa has seen nuclear jobs in Ynys Môn fall to a record low. Does the Minister agree that future-proofing our energy industries against job losses and rising costs requires a clear strategy and timely decisions from this Government?
Michael Shanks
The hon. Lady rightly takes every opportunity to ask me about the range of energy issues in her constituency, and I thank her for that. We have concluded the small modular reactor programme that we inherited from the previous Government, with Rolls-Royce winning that competition. The future of nuclear will be taken forward with Hinkley Point C, Sizewell C and the future of the SMR programme, but also with private sector investment in the US-UK partnership, which will build it. The decision on where the SMRs will be is under consideration by my noble Friend, the Minister for nuclear, and we will have more to say about that in due course.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
This Government like to tell people that growth is their first priority, but growth requires abundant and cheap energy. Does the Minister recognise that the only things they are growing by cutting the oil and gas industry are domestic prices, business prices and the number of job losses in the industry?
Michael Shanks
No, I do not. The clean power that we are trying to build will enable us to ensure that we remove gas as the price setter on our system. At present, gas sets the price 80% of the time, although it is often clean power that is powering the country. That is a problem that we have to end, so that all our constituents—but also businesses—benefit from cheaper power. The cheapest form of electricity that we can build at the moment is solar. I know that the hon. Lady objects to a number of those schemes in her own constituency, as she is perfectly entitled to do, but I would say to Conservative Members that if we want to build a power system that brings down bills, we have to support the infrastructure that goes with it.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
Sadly, this is not an isolated case; regrettably, it is a pattern of decline that we are seeing under this Government. Can the Minister tell us how many companies must go under before the Government realise that Great Britain cannot build a resilient and secure energy system by shutting down the energy industry?
Michael Shanks
Let me just challenge the premise of that question once again. Petrofac’s UK arm has not gone under; it is working today as it did yesterday and the day before and the day before that, and as it will the day after. It is a successful, growing business, and we have a responsibility to talk up the industry to ensure that it has a viable, long-term future. In the next few days we will continue to work intensively with the company to make that happen, but we do have a responsibility not to undermine a successful business, which is what the UK arm of Petrofac is. The company that went into administration today is the topco of Petrofac, which has no employees.
Richard Foord (Honiton and Sidmouth) (LD)
The United Kingdom’s electricity price is set by gas 98% of the time. By contrast, the electricity price in the European Union is set by gas less than 40% of the time. If the electricity price in the UK were set by the price of clean energy more often, would the UK not be a more attractive destination for investment in energy generation? [Interruption.]
Michael Shanks
The hon. Gentleman is absolutely right, although I think I heard a “no” from the Opposition Front Bench in response to his question. The only way in which we can deliver long-term energy security is to get off the rollercoaster of fossil fuels. The future is in clean energy: we see that across Europe, where nuclear and renewables are driving down the cost of electricity, but also insulating countries from the price spikes that we have seen as a result of, for instance, Russia’s invasion of Ukraine. We are too exposed to gas at the moment, which is why our electricity prices are high, even though for much of the day our power is being generated by clean energy, which is considerably cheaper. Clean energy is the economic opportunity of the 21st century. It is how we deliver our energy security, how we tackle the climate crisis, and how we bring down bills for people now and in the long term.
Lewis Cocking (Broxbourne) (Con)
While Labour continues down the path of net zero, the UK now imports more than 40% of its total energy needs from overseas. Given that the UK is the second most expensive country in the world for household electricity, will the Minister issue new oil and gas licences so that we can get oil and gas out of the North sea to support jobs and help energy companies to cut fuel costs for people right across these isles?
Michael Shanks
I do not know whether the footnote to the hon. Gentleman’s question says this, but even if we were to issue new licences, what we extracted from the North sea would be traded on the international market and we would pay the price that is traded on the international market. I would like to understand the hon. Gentleman’s logic in respect of how that would help us to bring down bills; it is not the case. Let me be clear about this: the long-term future of our energy system is a mix of nuclear and renewables. Removing ourselves from the volatility of fossil fuels is the only way forward, but it is also an economic opportunity for his constituents and those of Members on both sides of the House. We will build this infrastructure here with a proper industrial strategy to create the jobs of the future.
Gregory Stafford (Farnham and Bordon) (Con)
Can the Minister explain to my constituents how banning new drilling for oil and gas while importing gas from other countries at a higher cost will bring their bills down by £300, and can he say when that will happen by?
Michael Shanks
Let me say to the hon. Gentleman’s constituents, and indeed to anyone’s constituents, that over the past few years they have been paying the price for what happens as a result of our exposure to fossil fuels. The last Government had to spend tens of billions of pounds on reducing people’s bills because of that exposure. The hon. Gentleman may have forgotten about that, but I can tell him that his constituents will not have, because they are still paying the price for it. This Government are determined not to make the same mistake again. The Opposition are willing to go back to the fossil fuel casino again and again and hope that it gives them a better hand, but we are going to build the clean power system of the future and bring down bills for good.
Jim Shannon (Strangford) (DUP)
I have a number of constituents who depend on the North sea oil and gas industry for their employment. The Minister will be aware that if a buyer is not found, the knock-on effect will not be limited to those families facing redundancy, but will affect our nation’s energy security. Does the Minister accept that the uncertainty of Government support has had an effect on the future sustainability of the industry, and that we should be realistic and acknowledge that the Government need to continue to invest in the industry until we approach that far-off time when, just perhaps, we do not need oil and gas?
Michael Shanks
I always welcome the hon. Gentleman’s contributions in our many debates on energy, both here and in Westminster Hall. He is right that the impact of job losses goes well beyond the individuals, although I reiterate that in this case there have been no job losses in the UK; Petrofac continues to be successful, and it is in all our interests to make sure that remains the case.
On the hon. Gentleman’s wider question, I know that the impact is felt on supply chain jobs in his constituency and across the country. That is why we need to build up the new energy infrastructure here as well. For too long, all those offshore wind platforms that were towed into British waters gave jobs to other countries, instead of creating jobs here in the UK. We are determined to do something different. We are driving forward investment in the supply chains to make sure that there is a viable future for his constituents and for those across the country.