Labour’s Policies Impacting Business as UK Election Approaches
With the UK general election looming in less than a month, the impact of Labour’s policies is already being felt by businesses. On Wednesday, three oil and gas companies – Jersey Oil and Gas, Serica Energy, and Neo Energy – announced a one-year delay in the planned start of oil production at Buchan, an oilfield in the North Sea. This decision was explicitly linked to the earlier-than-expected timing of the election.
Jersey Oil and Gas, speaking on behalf of itself and its joint venture partners, stated, “While activities continue in order for the Buchan project to be ready for field development plan approval by the end of this year, the exact timing for achieving this key milestone and enabling project sanction is naturally linked to securing fiscal clarity from the next government and ensuring that the project remains financially attractive.”
This delay is a direct result of Labour’s energy policies, particularly their flagship energy policy, the Great British Energy plan. This plan, announced by Labour leader Sir Keir Starmer, proposes a £23.7bn investment in renewables over the next parliament, with a state-owned vehicle, Great British Energy, leading the charge. This investment will be funded by raising windfall taxes on North Sea oil and gas producers from 75% to 78%.
Additionally, Labour’s shadow secretary of state for energy security and net zero, Ed Miliband, plans to remove tax reliefs for producers, which could result in the loss of 42,000 jobs in the North Sea oil and gas industry, according to industry body Offshore Energies UK.
One particular aspect of Labour’s policies that has spooked businesses is their pledge to award no new North Sea oil and gas licences. This directly impacts developments like Buchan, which was expected to produce its first oil in 2026. Other projects, such as Glendronach, a gas field being developed by TotalEnergies, and Avalon, an oilfield being developed by Ping Petroleum, could also face delays as a result of Labour’s policies.
Francesco Mazzagatti, founder and CEO of London-based Viaro Energy, expressed concern over the lack of predictability and plannability caused by the uncertainty surrounding Labour’s plans. He stated, “With the four changes that the Conservatives made to the EPL (Energy Profits Levy) tax in a couple of years, and with Labour’s announced plans around the sector, there is a distinct lack of plannability and predictability that are required to carry out projects successfully and without delays. A more common-sense approach is long overdue.”
As the election approaches, both the Conservatives and the Scottish National Party are campaigning heavily on this issue. However, once in power, Labour’s policies could become a headache for the new government. Unite, the UK’s largest trade union and a major financial backer of the party, is urging Sir Keir not to ban new licences for oil and gas exploration until alternative measures are in place to offset potential job losses.
The industry is in desperate need of clarity and a decision from the incoming government. As the situation continues to unfold, it remains to be seen how Labour’s energy policies will ultimately impact the UK’s oil and gas sector and the economy as a whole.
