Aberdeen is confronting a potential economic crisis akin to the devastating decline of the UK’s coal industry in the 1980s, a new report has warned.
The Jobs Foundation, a charity established in 2023 by lobbyist and Tory peer Lord Matthew Elliott and Georgiana Bristol to champion the role of business, highlights a growing consensus among trade unions and energy sector leaders that current North Sea oil and gas policies risk widespread community decimation.
The report, authored by the charity’s research director Nick Tyrone, contends that the UK energy sector “stands on a cliff edge” and that time is “running out to save the energy sector” across Aberdeen, Scotland, and the wider United Kingdom.
Louise Gilmour, GMB Scotland secretary, drew a stark historical parallel in her foreword to the report:
“For those of us old enough to remember, this energy revolution is already resembling another, when sudden, savage pit closures 40 years ago only transitioned thriving mining communities into despair and dereliction,” she stated.
The 1980s pit closures led to significant unemployment, loss of purpose, and social decay in affected communities, marking a period of deindustrialisation and increased social inequality across Britain.
Gilmour further emphasised the ongoing need for fossil fuels, commenting: “We will always need oil and gas. I mean, I don’t like Donald Trump, but he’s right about ‘drill, baby, drill’. We’ve got this whole reserve of oil and gas just off our coast that we should be using.”
A central concern of the report is the Energy Profits Levy (EPL), commonly known as the windfall tax, which was introduced in May 2022. Initially set at 25%, the levy was increased to 35% from January 2023 and has since been extended to March 2030, with a further 3 percentage point increase from November 2024. This has resulted in an effective tax rate of 78% on extraordinary profits for North Sea operators. Energy firm EnQuest reported effective tax rates of 120.3% in 2022 and 113.3% in 2023, largely due to the EPL and non-deductible expenditures.
The Jobs Foundation report cites research from Robert Gordon University (RGU) indicating that the North Sea workforce could see significant contraction. A “low case scenario” projects approximately 400 jobs being lost every two weeks for the next five years, potentially shrinking the oil and gas workforce from 115,000 in 2024 to between 57,000 and 71,000 by the early 2030s.
The report argues that ruling out new North Sea drilling or exploration licences has been detrimental to Scotland and Aberdeen, stressing that jobs in the region’s energy sector will not be “magically kept or restored” during the transition to renewables due to different geographical advantages.
Both the Scottish and UK governments acknowledge the need for a transition. SNP Net Zero Secretary Gillian Martin criticised UK government policies, including the EPL, for “acting as a tax grab on Scotland’s energy and driving an accelerated decline of North Sea oil and gas.”
She called for the urgent removal of the EPL to ensure a “just and fair transition” and highlighted over £120 million invested by the Scottish government in the North East through its Just Transition and Energy Transition Funds.
Scottish Conservative shadow energy secretary and North East MSP Douglas Lumsden said: “This damning report underlines the economic sabotage being caused by both Labour and the SNP’s decision not to support new oil and gas licences.
“Aberdeen has been plunged into a state of emergency with 1,000 jobs estimated to be lost every month.
“The crisis this has inflicted on livelihoods, businesses and our high street has been devastating.
“Labour’s refusal to scrap the Energy Profits Levy, coupled with the SNP’s opposition to new oil and gas fields like Rosebank, Jackdaw, and Cambo, is killing the industry and our North East economy.
“Both of Scotland’s governments must drop their irresponsible playground politics, back North Sea oil and gas, protect jobs and safeguard our energy security before it’s too late.”
The UK Department for Energy Security and Net Zero, meanwhile, stated that its plan aims to build a “prosperous and sustainable future for the North Sea,” backed by investment in clean energy industries, supporting existing fields, and delivering new jobs for North Sea workers.
The UK government has committed to managing existing oil and gas fields for their lifespan but has signalled it will not issue new licences to explore new fields, arguing that new licences will not lower bills or enhance energy security.
