Fresh claims have emerged of deep divisions within Labour over Britain’s defence spending, with reports suggesting Energy Secretary Ed Miliband opposed plans that supporters believed could have generated billions of pounds for rearmament through increased oil and gas production in the North Sea.
According to reports, officials at the Treasury examined whether expanding North Sea drilling could provide a substantial new source of tax revenue to help fund the Ministry of Defence’s long-awaited Defence Investment Plan.
The proposal is understood to have been considered during discussions between the Treasury, Downing Street and the Ministry of Defence over how to finance major increases in defence spending. Reports suggest Chancellor Rachel Reevessupported the proposal before it was presented to Prime Minister Keir Starmer.
However, Cabinet sources quoted in national newspaper reports have claimed that Mr Miliband opposed the idea, with one source alleging he effectively blocked the proposal from progressing.
Supporters of greater North Sea development argue that increasing domestic oil and gas production could both strengthen Britain’s energy security and provide additional tax revenues at a time when defence spending is under increasing pressure.
Critics of Labour’s energy policy have repeatedly accused Mr Miliband of placing ideological commitments to Net Zero ahead of economic growth, industrial competitiveness and energy independence. Those criticisms have intensified amid concerns over defence funding and the future of Britain’s offshore energy sector.
The same reports also claim frustration has been growing inside Government over delays to decisions affecting the proposed Rosebank and Jackdaw oil and gas developments, projects which supporters say could safeguard thousands of skilled jobs, particularly in Scotland.
One unnamed Cabinet source reportedly said the Government’s handling of North Sea policy contributed to Labour’s poor performance in the recent Aberdeen by-election, where energy policy became a major campaign issue.
The row comes as speculation continues over who could become Chancellor should Labour undergo a future leadership change. Mr Miliband has been mentioned as a possible candidate, although reports suggest some Labour MPs are concerned that his economic approach would prove unpopular with both investors and voters.
According to reports, some MPs representing traditional Labour constituencies have privately warned that moving too quickly away from domestic oil and gas risks damaging employment while increasing Britain’s dependence on imported energy. Others are said to believe maintaining North Sea production is essential both for energy security and for keeping household energy costs under control.
Industry figures have previously argued that a more supportive licensing regime, combined with changes to North Sea taxation, could generate between £10 billion and £13 billion in additional revenues by the end of the decade, although such estimates vary depending on production levels and future energy prices.
Meanwhile, the Government is continuing work on its delayed Defence Investment Plan after months of negotiations over how to finance increased military spending. Reports suggest departments have been asked to identify further spending reductions as ministers attempt to balance competing priorities across Whitehall.
A Treasury spokesman has also denied the allegations, calling them “categorically untrue”.
