UK Energy Secretary Ed Miliband has been told that Britain should scrap its ban on extracting new oil and gas from the North Sea.
Warren Stephens, the US ambassador, accused Mr Miliband of pursuing the “incorrect policy” and said the Donald Trump had relayed the same message to Sir Keir Starmer.
Speaking to Sky News, Mr Stephens said energy costs are too high and he would like to see “the UK economy to be as strong as it possibly can be so the UK can be the best ally to the US that it possibly can be.
“Having a growing economy is essential to that, and the electricity costs make it very, very difficult. So, I hope that the UK will continue to examine the policies in the North Sea and frankly, make some changes to it, to allow for more drilling and more production, because you’re getting — you’re using — oil and gas but you’re importing it. Why not use your own?”
The Labour government has banned new oil and gas drilling as part of a manifesto commitment to not issue new licences to explore new fields in the North Sea.
Mr Stephens also discussed energy with Scotland’s First Minister John Swinney on Saturday and Labour’s Scotland Secretary Douglas Alexander on Friday, though it is not known what emerged from those talks.
The call from Mr Stephens came as Andrew Gardner, chairman of Ineos at Grangemouth, condemned Westminster’s “ruinous energy policies” which he said were putting 200,000 jobs at risk.
Ineos owns the Grangemouth fuel terminal and the Forties Pipeline, and said UK government policy was deterring investment in the ageing basin and undermining Britain’s energy independence.
“There are 200,000 jobs in the UK associated with oil and gas, and they are all at risk unless the government changes course.”
Labour is expected to make some changes to its North Sea strategy ahead of the 26 November budget.
This is expected to include ending the energy profits levy, or windfall tax, a year early. Chancellor Rachel Reeves is said to be considering removing the 5% VAT charge on domestic energy bills.
The government is also likely to allow the Rosebank field to go ahead. It was explored ahead of the current ban so would its approval would not breach Labour policy.
However, Labour will come under pressure from the trade unions and climate lobby. Research by Unite, released on Sunday, found that last year energy companies made a total of £30 billion in pre-tax profits, equating to roughly £500 per household.
Sharon Graham, Unite general secretary, said: “What the Unite energy costs report clearly shows, is that households are being fleeced pure and simple.
“The government is turning a blind eye to these excessive profits. That must change. Everyday people cannot continue to pay. The chaos of the current system has resulted in the highest energy bills in Europe.”
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