Barring a Devon Loch style collapse, the Labour Party will win the UK general election on July 4, Keir Starmer will become Prime Minister and Ed Miliband will almost certainly take on a senior energy policy role.

After the energy crisis of 2022, and the subsequent cost-of-living crisis that UK is still grappling with, it’s only natural that the sector, and therefore Miliband, are central to the national conversation. But while rhetoric is batted back and forth and the theatre of vote courting is scrutinised by the media, everybody knows what the end result will be.

Realistically the writing has been on the wall for a while now and the energy sector has had plenty of time to analyse, predict and overthink Starmer’s plans for the industry. To paraphrase philosopher Descartes, greater attention should be given to what people do, rather than what they say, and the conversation must now turn to what a Labour government looks like in practice.

We all know the headline pledge to create ‘GB Energy’ and headquarter it in Scotland, but the nuts and bolts of this flagship policy remain shrouded in uncertainty, while the North Sea is nervously waiting to see what the new government has in store for oil and gas. The upcoming launch of the Labour manifesto has a lot of questions to answer.

The impact of GB Energy

According to Starmer, GB Energy is an “investment vehicle” that will drive funding of clean power, rather than a publicly-owned utility as had originally been thought. The PM in-waiting believes it will encourage the private sector to invest too and will lead to “tens of thousands of jobs”. Overall, the government will spend £8 billion on GB Energy over the course of the next five years, although £3.3bn of that is ringfenced for Labour’s local power plan for small-scale clean power projects. 

In which city GB Energy will be headquartered remains to be seen, but Aberdeen, the UK’s energy capital, has a strong claim as its spiritual home. The north-east, or more specifically the North Sea, has been the source of much of the country’s energy since the 1970s, generating hundreds of billions of pounds in revenue for the Treasury in the process. 

It is a region in transition though, as the oil and gas industry continues its long decline to be increasingly replaced by renewables. Sustaining, and hopefully growing, jobs along the way is paramount, and transitioning workers from one sector to the other, as outlined by a recent Robert Gordon University report, is a challenge that Starmer and his party must negotiate. Insiders suggest the announcement of the HQ location is being kept up Labour’s sleeve to use ahead of the next Scottish Parliament election, likely to be held in 2026.

GB Energy polls well and is liked by voters, who feel that it removes fears over energy security and a reliance on foreign imports. But the public also like the windfall tax on the profits of oil and gas companies, whereas there are legitimate gripes in Aberdeen and the wider energy community over its impact on the sector’s ability, or indeed willingness, to invest in the cleaner energy sources needed. That disconnect between sector and consumer is a tightrope that Starmer must walk.

Opportunity for Starmer

The manifesto launch is an opportunity for Starmer to outline exactly what Labour’s plans are and how he intends to implement them. It must outline exactly how far Labour will go in its green pledges and whether this will be at odds with the long-term future of North Sea oil and gas. Moreover, Starmer must provide granular detail on what GB Energy actually is, beyond being a rather vague investment vehicle, and what technologies Labour are backing to meet its 2030 clean power objectives and the UK’s wider obligation to zero out emissions by 2050.

In an interesting session hosted recently by Politico, its energy reporters made the notable point that while Starmer has vowed to reform the planning system, voters may be surprised by what this physically looks like, as onshore windfarms, battery storage plants and hydrogen hubs pop up around the countryside over the coming years. It’s hardly controversial to say that a lack of infrastructure building has held the UK back, and Labour must reinforce what mandate it has to make the necessary widespread changes. As our client, DNV, has said previously, nimbyism opposition is a major hurdle in the route to net zero.

Labour are in the final furlongs of the general election race and seems poised to win by more than a length. We are now at the stage where every sector, from oil and gas to renewables, needs to know what Starmer intends to do with power.

Ben Palmer and Hamish Penman are account managers in BIG Partnership’s energy team.

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