Former UK health secretary Wes Streeting used a Sunday Times interview to back new North Sea oil and gas drilling licences and propose a targeted reduction in employers' national insurance contributions, positioning himself ahead of a potential challenge for the Labour leadership. Streeting, who quit the cabinet just over a fortnight before the interview, argued that additional North Sea licences should be issued not to reduce household energy bills but to generate additional tax revenue for the government. On national insurance, he said a targeted cut would 'actively incentivise' hiring, particularly of young people, and indicated he would be open to reversing the increase in employers' contributions introduced by Chancellor Rachel Reeves in her first budget.
The policy positions place Streeting in direct opposition to two pillars of the current government's programme: its energy strategy, centred on winding down North Sea extraction, and the employers' national insurance rise that formed a central plank of Reeves's autumn fiscal package. Streeting also backed equalising capital gains and income tax rates and reiterated support for the UK's eventual return to the European Union, while saying the party should honour its manifesto commitments on Europe in the near term. As reported by LBC, he told The Times that Labour had come to power 'underprepared' and 'lacking any sort of intellectual curiosity' [Source: LBC].
UK-listed North Sea producers stand to be most directly affected should Streeting's licensing proposals gain political traction. Harbour Energy (HBR.L), the largest UK-listed independent oil and gas company, holds the largest number of North Sea drilling licences on the UK Continental Shelf. Serica Energy (SQZ.L), Ithaca Energy (ITH.L) and EnQuest (ENQ.L) operate portfolios concentrated in the basin, while Shell (SHEL.L) and BP (BP.L) are among a group of seven energy majors — also including ExxonMobil, Centrica, ConocoPhillips, Repsol and TotalEnergies — that collectively own 33.4% of North Sea equity [Source: Common Wealth]. The sector has been operating under a headline tax rate of 78% on UK oil and gas activities following the government's increase to the Energy Profit Levy, which also removed the investment allowance for non-decarbonisation expenditure from 1 November 2024 [Source: Deloitte]. Industry has expected that increase to reduce investment appetite in the North Sea and weigh on upstream independents with significant basin exposure [Source: Deloitte].
Streeting's remarks follow a similar intervention by former prime minister Sir Tony Blair, who published an essay the prior week criticising aspects of Labour's policy agenda and accusing the government of lacking a 'coherent plan' [Source: City AM]. They also come in the wake of a review by former health secretary Alan Milburn into the rising number of young people not in employment, education, or training, which provided the immediate backdrop for Streeting's comments on using national insurance policy to incentivise youth hiring. Streeting additionally backed fellow potential leadership contender Andy Burnham's support for greater devolution and state intervention in the market, describing it as 'a good pro-fairness thing to do'. No government policy changes, licensing rounds or fiscal decisions have been announced; Streeting's proposals remain those of a prospective leadership challenger.
Sources: Bloomberg, The Guardian, LBC, GB News, Deloitte, City AM, Statista, Common Wealth