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7 June 2024

The SNP’s U-turn on oil and gas is a challenge to Labour

Keir Starmer’s party may look like it has failed to choose Scotland’s side in the energy debate.

By Chris Deerin

Speaking to a group of Americans this week, I was asked about Scotland’s increasingly troubled relationship with North Sea oil. They were mostly elderly and retired, and remembered the excitement around its discovery in the early 1970s. As far as they could tell, today’s Scottish politicians want little to do with its lucrative but environmentally awkward black gold.

This often feels true. As fears over climate change have grown, politicians have become increasingly oil-sceptic (in public at least). Labour has ruled out granting any new North Sea licences when it takes power and wants to extend the windfall tax on oil and gas companies. The SNP, for as long as it was in partnership with the Greens, was similarly loath to voice support for the industry.

The Nats, at least, appear to be changing their stance as new leader John Swinney drags his party back towards the centre. With the coalition with the anti-growth Greens now history, his task is considerably easier.

As so often, it was Kate Forbes who was brought out to signal the new position. Speaking to journalists during a campaign visit to Linlithgow, the Deputy First Minister said: “We’ve been clear that we’re not against new licences per se, but they have to meet a climate compatibility test. We’re very serious about meeting our climate change targets and obligations; we believe it is one of the most pressing issues of our day. But we also believe that it needs to be a just transition, which means you can’t leave workers behind and we also need the talent, skills, infrastructure and resources in the industry to reinvest.” She reiterated this point when she stood in for Swinney at First Minister’s Questions yesterday.

It’s not in fact “clear” that the SNP have never been against new licences – as first minister, both Nicola Sturgeon and Humza Yousaf were regular critics of any such step, having declared a “climate emergency”. The rhetoric that emerged from the Nat-Green alliance was always hostile to the oil industry. Forbes’ comments were more than a little disingenuous.

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But Swinney’s party has an abundance of political woes and stands to lose many if not most of its seats to a rejuvenated Scottish Labour. The SNP has also made significant missteps in relation to rural Scotland, and has already had to rethink plans to ban wood-burning stoves and block fishing in 10 per cent of the nation’s coastal waters. Given Forbes represents a vast Highland constituency, her return to government is key to efforts to re-establish the once-strong but now frayed SNP connections with northern Scotland.

The electoral battle in the North East has been given added intensity by the announcement that Douglas Ross, the high-profile Scottish Tory leader at Holyrood, will now contest the Aberdeenshire North and Moray East constituency, after existing Conservative candidate David Duguid was prevented from standing by party HQ.

How will this Nat shift play among progressives, especially in the central belt? The party has drawn a significant level of its support in recent years from younger, progressive voters and activists for whom climate change is a priority. The Greens, in particular, have been in a foul temper ever since Forbes was appointed as Economy Secretary and Deputy First Minister, repeatedly attacking her conservative social views. Green co-leader Patrick Harvey this week accused Forbes and the SNP of “a shameless retreat from a position of climate leadership” over the rethink on licences.

But the hard line taken by major political parties has already had an impact. Oil bosses have been warning for months that policy uncertainty was causing them to rethink investment plans. In particular, Labour’s plan to raise the windfall tax from 75 per cent to 78 per cent, and to close various loopholes, this week saw three oil and gas companies – Jersey Oil and Gas, Serica Energy and Neo Energy – announce decisions to delay oil production at Buchan, an oilfield in the North Sea off Aberdeen.

It may not be the most fashionable of issues, but oil and gas production remains essential to the Scottish economy, particularly to jobs in the North East, and will continue to be so for decades to come.

As we’ve learned more about Labour’s somewhat woolly plans for GB Energy, which it says will be headquartered north of the Border, it’s become clear that it is really just a reinvention of the Green Investment Bank, which was set up by David Cameron’s government in 2012 then sold to the private sector in 2017. Like GIB, GB Energy will be a vehicle to invest public money to tackle market shortages in renewables, and crowd in private spending. Like GIB was, it’s a perfectly good idea, but it doesn’t feel like the game changer it was once claimed to be. Nor does it seem likely to replace all those oil and gas jobs in North East Scotland, or those in the heavily reliant supply chain – the so-called just transition.

Perhaps that doesn’t matter so much for Labour right now, as it is unlikely to win many seats in the area at this general election. It matters more to the SNP and the Tories, who are both hoping to gain seats on 4 July. But come the Holyrood election of 2026, Labour could be left looking like it has failed to choose Scotland’s side in this particular argument.

[See also: The SNP’s U-turn on oil and gas is a challenge to Labour]

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