How Starmer will pay heavy price for North Sea oil and Grangemouth shutdowns

Who would want to be Prime Minister these days? Who could blame you if you wouldn’t take the job for all the specs in Specsavers? Despite winning July’s general election with a stonking majority of 174 seats, Sir Keir Starmer’s honeymoon period was about as brief as the premiership of his last but one predecessor, Liz Truss.

The sheer number of MPs massed behind him in the House of Commons might invite comparisons with Labour’s last leader to win a general election, Sir Tony Blair, who was swept to power in 1997 with a majority of 179. But the parallels between Labour now and then begin and end with the number of constituencies won.

There was an excitement and optimism about the newly fledged Blair government that is in stark contrast with the dour “short-term pain for long-term gain” message delivered by Starmer in his speech to the party’s annual conference in Liverpool this week.

The Grangemouth oil refinery is to close with the loss of hundreds of jobs as the UK Government strives to achieve its net-zero goals (Picture: Jane Barlow) | PA

Starmer’s kamikaze tactics

Labour’s victory on July 4 was broad but shallow. Just one in five of the electorate backed the party – 34 per cent of a low 60 per cent turnout. Starmer was bolstered not by any great enthusiasm for him or his party but by not being a Tory, and by Conservative voters who simply could not bring themselves to vote or who backed Nigel Farage’s Reform UK instead.

Starmer ought to be governing in a way that will reassure swing voters in the scores of seats where his party’s margin of victory was small. Instead, he seems intent on alienating these floating voters with policies that will only erode his party’s thinly spread support.

Scrapping the winter fuel allowance for the vast majority of pensioners is an obvious example of kamikaze tactics in the battle for hearts and minds. Vulnerable people who would otherwise have survived the winter will instead die because they could not afford to heat their homes.

VAT on private school fees

In other areas, an ideological lurch to the left is likely to further damage the new Prime Minister’s already plunging approval ratings. Raising private school fees by 20 per cent is not going to hit the people that delegates in Liverpool this week might like to think it will. The addition of VAT to fees will be small change to those who send their children to board at the likes of Eton, Harrow or Fettes. 

Instead the move will affect those small-c conservative, double-income families in which parents are only just managing to scrape enough together from taxed income to send their children to a fee-paying school of their choice because, in some places, the state sector is simply not providing a good education.

In her Budget next month, Chancellor Rachel Reeves is likely to increase capital gains tax – another policy that appears driven by simplified ideology rather than a practical desire to help people through growing the economy. Again, it is not the super-rich – corporate fat cats with astute and well-paid accountants – who would suffer from a capital gains tax rise. It is small businesses that would be hit, along with hard-working lower and middle income parents who are striving to pass on to their children more than their parents were able to pass on to them, or to enjoy a slightly more comfortable retirement after helping to keep the economy moving for 30 or 40 years.

Ed Miliband, Secretary of State for Energy Security and Net Zero, addresses the Labour Party conference in Liverpool this week. | PA

Goofy but ideological

Another major difference between Blair in 1997 and Starmer in 2024 is the public profiles of those around the Cabinet table. The likes of Gordon Brown, Mo Mowlam and Robin Cook were well known figures when Labour came to power under Blair.

Ed Miliband is one of the few people in Starmer’s Cabinet with a similarly high profile, having led Labour from 2010 to 2015. For now at least, the Prime Minister seems content to let him have free rein over his brief of Energy Security and Net Zero, but this may not last.

Behind Miliband’s affable and goofy demeanour is a fanatical idealogue deeply wedded to the radical agenda of decarbonising the National Grid by 2030 and achieving net zero by 2050.  It is becoming increasingly obvious these goals are technically, economically and politically impossible. 

The burgeoning renewables industry is heavily dependent on vast levels of public subsidy that continue to drive up energy bills. Yet again, this is regressive: it is the poorest who will be worst hit, along with struggling small businesses.

North Sea oil job losses

In the absence of some unforeseeable technological breakthrough, we are going to need a lot of oil and gas for decades to come. But Labour has ruled out new North Sea licences; has walked away from a legal challenge against drilling in the massive Rosebank field off Shetland; and will raise and extend the windfall tax on oil and gas companies. These are plans that will cost tens of thousands of jobs.

For Miliband to dissemble that there is somehow little if any connection between his and his party’s hostility to North Sea oil and gas and the closure of the Grangemouth oil refinery is disingenuous at best.

The UK car industry, which employs close to a million people, is losing out to China in the switch to electric vehicles and looks to be heading the same way as Grangemouth, the steel industry, the chemicals industry, and British manufacturing in general in the rush to deindustrialise.

One-term Prime Minister

Support for net-zero-inspired projects will go through the floor as bills continue to rise and more jobs are lost. At some point reality is going to bite. Starmer will have to either wise up fast – setting himself on a collision course with Miliband – or face the consequences at the ballot box.

In Scotland, this could mean that defeating a spent SNP government in 2026 will be harder than might have been envisioned in the immediate aftermath of Labour’s landslide general election victory.

And at Westminster, Starmer could risk going down in history as a prime minister who – despite entering Downing Street with a thumping great majority – managed to survive just one parliamentary term.