Andy Burnham is set to announce plans to allow more oil and gas drilling in the North Sea.
He is understood to be considering allowing drilling on the Jackdaw and Rosebank oil fields off the coast of Scotland, where licences have already been granted – which would mean the decision would not technically break Labour’s 2024 manifesto pledge not to issue new licences.
It is expected to come alongside a whole slate of measures to try and alleviate the impact of the cost of living crisis and reduce household bills, according to the BBC.
In his inaugural speech as prime minister on Monday, it is anticipated Burnham will nod to the intention to allow drilling at Jackdaw and Rosebank, but officially he will have to wait until they are legally cleared.
In light of the energy crisis sparked by the blockade of the Strait of Hormuz amid the US-Israeli war on Iran, many energy experts have called for the UK to make the most of its North Sea oil and gas resources.
Even some who back net-zero and the North Sea energy transition away from fossil fuels have welcomed Burnham’s intentions, arguing we need greater fuel security and can use the drilling to help ease the transition.
What it means for your energy bills
Independent polling by trade association Offshore Energies UK (OEUK) revealed more than seven in ten people believe the UK should produce oil and gas from its own waters rather than rely on imports.
All the gas that comes from the North Sea is used in the UK for central heating in around 20 million homes with gas boilers, as well as for industrial uses.
The energy price cap, the price most households pay for energy and gas, rose by 13 per cent to £1,862 a year at the start of this month and is only expected to drop by 0.5 per cent in the autumn due to the Iran war.
Burnham is understood to be keen to tackle soaring energy bills to show people he is making a “dynamic start… focused on delivering tangible change to people’s lives as soon as possible”.
But according to Energy UK, due to the global pricing system applied to oil, even if the UK expands its drilling in the North Sea, which many have long campaigned for, “any increase in gas supply will not have a direct or material impact on energy prices”.
This means that more national supply is unlikely to be passed on to UK customers through lower energy bills.
But consumers could feel the change in other ways.
The economic benefits
While people may not enjoy lower energy bills as a result of further gas and oil drilling in the North Sea, Burnham’s plan is expected to yield economic benefits in other ways, such as raising more tax revenue.
Enrique Cornejo, policy director of OEUK, said: “The development of Rosebank and Jackdaw alongside all the other North Sea resources would help strengthen energy security, support skilled jobs and investment across the UK, and ensure we make the most of our own resources while building a lower-carbon future.”
The Government has come under pressure to tap into the Rosebank and Jackdaw fields amid soaring energy bills (Photo: Andrew Milligan/PA)“While we use oil and gas, it is common sense that we prioritise our own production, our own jobs, value in our economy, delivered with lower emissions than imports.”
In particular, OEUK was keen to see further reforms to regulatory and tax frameworks for the North Sea industry which it says could boost tax receipts by more than £13bn.
Even voices in favour of the ultimate transition away from oil and gas in the North Sea said Burnham’s intention was a welcome way to boost the local economy and help better fund a smooth shift to greener energy sources.
Greg Jackson, CEO of Octopus Energy: “Britain needs to become less dependent on gas, but for as long as we need it, it’s mad to ship it half way round the world rather than using our own.
“The price is set globally, so North Sea gas won’t cut bills, but it will cut emissions, pay taxes here and maintain British jobs.
“A pragmatic energy transition can actually mean less damage to the climate and a better outcome for workers and the economy.”
Cutting household bills
North Sea drilling might not reduce your household bills, but Burnham has a raft of other plans expected to be announced in the hours and days after moving into No 10, according to reports.
It is understood that the Labour leader is considering proposals that could significantly change the bill outlay for households, including changing standard gas charges, removing policy levies from bills and moving them into general taxation and reducing the rate of VAT on electricity.
The range of measures could cut household energy bills by £130 a year and mean you can run a heat pump more cheaply than a gas boiler, according to The Guardian.
His team is reviewing a proposal from public policy think tank Nesta, which would make electricity cheaper to run than gas – at a cost of £3.2bn a year to the taxpayer.
This could all be part of Burnham’s pledge to give “people breathing space on the cost of living” amid his raft of new policies as he becomes prime minister – also expected to include plans to take water and energy companies under public control.
If any of these policies were adopted, there would have to be provision for the cost in the next Autumn budget.
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