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Labour’s turning off the taps

9 June 2023
| by Field Team

With Labour seemingly backtracking on energy, Field's Stephen Alton takes a look at how a Labour government might face a backlash against cuts.

Are Labour under the thumb of the unions? Certainly not on energy policy. An emboldened Keir Starmer announced the death of new oil and gas under a future Labour government despite concerns from the GMB union. As part of one of Labour’s “mission” to make Britain a clean energy superpower, Starmer announced they would ban all new oil and gas licences in the North Sea, and instead focus on investing in green alternatives. And this morning Rachel Reeves has backtracked on their flagship £28bn a year spending commitment on green energy projects. 

A clear dividing line between Labour and the Conservatives, the ‘just stop future oil’ policy is also a deviation from one of the Party’s biggest funders: the GMB union, who argued that the policy would be “self-defeating” and decimate areas that rely on the industry for jobs. Comparing it to the closure of the mines, regions would be left behind without the jobs, skills and investment brought from North Sea drilling. 

The Conservatives jumped on this policy straight away, pointing out that a funder of Just Stop Oil also donated to the Labour party – and arguing Labour was more the party of picket lines than factory floor workers. The Government’s Energy Bill seeks to increase energy security with UK-based production, and they argue that without allowing more oil and gas licences, it threatens security and ‘plays into Putin’s hands’. Nevertheless, the issue has raised what could become an increasing fault line between the Party and the unions: that the transition to net zero will invariably cause the loss – or replacement – of jobs in certain areas. 

Starmer held firm and went into the belly of the beast by addressing the union’s congress this week and arguing that they had learned the lessons of the past and that any jobs lost through oil and gas would be replaced by emerging green technologies. This would have been feasible when Labour committed to investing £28 billion every year on supporting emerging green technologies.

But now it is not just the taps in the North Sea being turned off, as the Shadow Chancellor has put the screws on the spending taps too. This morning she has watered down the £28 billion pledge by committing to ramp up spending to reach the £28bn level over the course of the Parliament rather than start from £28bn. For weeks there have been suggestions that many in Labour felt the pledge was too high and ultimately would not be fiscally responsible. Indeed, the pledge was at roughly the same level that the US is spending every year through the Inflation Reduction Act, and their economy is multiples larger than ours. 

This comes days after the Shadow Chancellor ordered shadow ministers to not make any unfunded spending commitments in meetings with business. There are growing concerns that Labour are being “bounced” into big policies by “loose lipped” colleagues. Indeed, commitments such as delivering HS2 in full and Northern Powerhouse Rail are reportedly not official Labour Party policy, and more a result of various meetings and speeches. 

More clarity is expected on Labour’s energy policy in the next month when the energy “mission” is formally announced, but it is clear that Labour isn’t the Party of big, unfunded spending pledges anymore. The air of a seemingly inevitable win at the next election is making them more cautious for fear of actually having to implement what they have announced. 

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