Andy Burnham is expected to reopen the way for new oil and gas drilling licences in the North Sea when he becomes British prime minister, marking a potentially sharp change in the energy policy pursued by Labour since its 2024 election victory. Reports published on Saturday said the incoming leader was preparing to relax the government’s restrictions on new offshore development as part of an early package intended to demonstrate support for domestic industry, manufacturing and energy security.
Burnham is due to enter Downing Street on Monday following the departure of Keir Starmer. He is expected to form his cabinet and begin setting out a broader programme covering energy, public ownership, housing, social care and regional devolution. However, his team had not confirmed the details of any North Sea proposal by Saturday, leaving unresolved whether the change would involve a new licensing round, approval of selected projects or a wider replacement of the existing policy.
A decision to issue new licences would depart from Labour’s 2024 manifesto, which promised to honour licences already granted while refusing new ones. That position was designed to distinguish between an immediate shutdown of the existing industry and a managed transition away from expanding fossil fuel extraction. Burnham’s expected approach would instead allow the government to consider additional exploration or development as fields in the mature UK Continental Shelf continue to decline.
The policy debate contains an important regulatory distinction. A petroleum licence gives a company rights to search for and potentially extract resources within a defined area, subject to further conditions. Individual projects also require environmental, development and production consents before extraction can begin. Changing the policy on future licences would therefore be broader than approving any single field, while decisions involving existing projects would still have to pass separate regulatory and legal tests.
The immediate political argument has nevertheless become closely associated with Rosebank, west of Shetland, and Jackdaw, east of Aberdeen. Both projects were advanced under Conservative governments and are among the most prominent undeveloped resources remaining in British waters. Their supporters describe them as tests of whether the United Kingdom intends to maintain an offshore energy sector during the transition to lower-carbon power.
The projects’ underlying histories differ from the proposed restoration of new licensing. Rosebank and Jackdaw were already within the licensing system before Labour entered government. The central legal dispute concerned the consents allowing their development, not simply whether the operators possessed offshore licences. In January 2025, Scotland’s Court of Session ruled that the approvals had been granted unlawfully because environmental assessments had not considered the emissions produced when the oil and gas were eventually burned.
The judgment followed a wider change in British environmental law after the Supreme Court concluded that decision-makers could not exclude foreseeable downstream emissions from assessments of fossil fuel projects. The Rosebank and Jackdaw operators were permitted to continue certain preparatory activities, but extraction could not begin without fresh decisions under a revised assessment process. The ruling did not impose an automatic prohibition on the projects; it required the government and regulators to evaluate their full climate effects lawfully.
Updated environmental material has since been submitted, placing the next decisions back with the government and offshore regulators. That process means Burnham could support one or both projects while still having to demonstrate that ministers considered downstream greenhouse-gas emissions, alternative scenarios and the country’s climate commitments. Any approval that appeared to disregard those requirements would be vulnerable to renewed legal challenge.
Pressure for a policy change has come from offshore companies, supply-chain businesses, trade unions and parts of the Labour parliamentary party. Industry representatives have argued that allowing investment would signal that Britain remains committed to producing energy and supporting heavy industry rather than relying increasingly on imported fuels and equipment. They also warn that uncertainty over approvals and taxation is accelerating the departure of investment, workers and technical capacity from the North Sea.
For Burnham, those arguments fit with his stated emphasis on reindustrialisation and a more geographically balanced economy. Offshore oil and gas supports engineering, fabrication, maritime services and specialist contracting across north-east Scotland and in industrial centres elsewhere in Britain. A government seeking to rebuild domestic manufacturing may view continued activity as a way to preserve those capabilities while offshore wind, carbon storage, hydrogen and decommissioning projects expand.
The scale and duration of the employment benefits remain contested. Information submitted for the Jackdaw project said its development phase had supported more than 1,400 direct, indirect and induced jobs. Across the field’s lifetime, the developer estimated employment would average nearly 500 jobs a year, including 273 positions already connected to the Shearwater host installation and 27 additional roles specific to Jackdaw.
Adura, the joint venture bringing together Shell and Equinor’s British offshore interests, has presented larger combined estimates for Jackdaw and Rosebank. It has said the projects could support 3,500 jobs during peak construction, sustain 880 positions through production and generate more than £28 billion in gross value added over their lifetimes. Those are company projections and are challenged by environmental organisations, which argue that many jobs are temporary, indirect or linked to infrastructure that already exists.
The dispute over employment reflects a larger disagreement about how the government should manage the basin’s structural decline. Supporters of new drilling say fields that use existing platforms and pipelines can slow the fall in production, preserve tax receipts and give workers more time to move into emerging industries. Opponents say declining reserves mean additional approvals cannot provide a durable employment strategy and risk diverting capital and political attention from renewable projects that could offer longer-term work.
Energy prices are another central point of contention. Conservatives and Reform UK have argued that increasing domestic supply could contribute to lower bills and reduce exposure to disruptions in global trade. Industry groups place particular emphasis on gas imports, including liquefied natural gas that can carry higher production and transport emissions than some domestically produced supplies.
Critics respond that British oil and gas are sold into international and regional markets rather than reserved for domestic consumers at controlled prices. New North Sea production would therefore be unlikely to determine household bills, which are influenced by wholesale markets, network costs, taxation and the wider European energy system. Even former ministers who supported additional licences have acknowledged that greater production would not necessarily produce a direct or substantial fall in consumer prices.
The stronger argument made by drilling advocates is consequently about security of supply rather than guaranteed price reductions. Domestic output can reduce the physical volume that must be imported and may offer strategic value during severe disruptions. Yet the United Kingdom is expected to remain a net energy importer as older fields decline, meaning new projects would slow dependence rather than reverse it. The timing also matters because large offshore developments can take years to reach production.
Climate organisations and the Green Party have criticised the prospect of new licences, arguing that the government should accelerate investment in renewable generation, storage, electricity networks and energy efficiency. They say approving new fossil fuel projects would conflict with Britain’s legally binding carbon budgets and weaken its diplomatic credibility when urging other countries to cut emissions. Campaigners are also preparing to scrutinise the assumptions used in the revised assessments for Rosebank and Jackdaw.
Burnham’s expected move could create an early division within Labour. Ed Miliband, the energy secretary under Starmer and a political ally of Burnham, has previously strongly opposed Rosebank and promoted a rapid expansion of clean electricity. Trade unions have also expressed concern about parts of the net-zero programme when they believe replacement employment and industrial investment are arriving too slowly. Burnham will have to decide whether energy remains with Miliband, moves into a broader business department or is placed under another senior minister.
The composition of the cabinet will therefore provide an early indication of how the incoming prime minister intends to balance climate policy and industrial intervention. Burnham has described himself as pro-business while also supporting greater public control of essential services. A North Sea expansion combined with public energy investment would suggest an approach focused on managing several energy sources simultaneously, rather than treating fossil fuels and renewables as entirely separate political programmes.
Scotland will be particularly affected. Offshore licensing and major energy taxation are controlled from Westminster, while employment, economic development and the political consequences of industrial decline are concentrated heavily in Scottish communities. Aberdeen and the surrounding region have experienced falling production, uncertainty over investment and growing competition for workers between oil, offshore wind and decommissioning. Burnham is expected to emphasise that a transition must retain employment and industrial value in those communities.
The Scottish political response is likely to focus on whether the policy provides a credible transition plan or merely extends dependence on a shrinking sector. Supporters of continued production want clear timetables for field approvals, stable taxation and investment in ports and supply chains. Opponents want comparable clarity on renewable manufacturing, worker retraining, public transport, grid infrastructure and how government support will prevent communities from carrying the costs of decommissioning and industrial change.
The decision also has implications beyond Britain. North Sea countries are attempting to expand offshore wind, electricity interconnection, carbon capture and hydrogen while continuing to manage oil and gas production. A British shift towards new licensing would be watched by European governments seeking to reconcile energy security with commitments made under the Paris climate agreement. It could also affect perceptions of Britain’s climate leadership ahead of future international negotiations.
Several practical questions will determine the significance of Burnham’s reported reversal. The government must clarify whether licences would be offered across broad areas or only where discoveries can connect to existing infrastructure. It must define the climate, economic and energy-security tests used to select projects. Ministers will also face decisions on the windfall tax, decommissioning liabilities, domestic supply-chain requirements and whether public support should be conditional on investment in low-carbon operations.
Rosebank and Jackdaw will be the most visible early cases, but they should not be treated as exact substitutes for a new licensing policy. Fresh consent for either project would concern developments already in the system, while a new licensing round would create opportunities in additional areas and potentially extend exploration for years. Burnham could choose one course without immediately adopting the other, although Saturday’s reports indicated that a broader relaxation was under consideration.
Until a formal announcement is made, the extent of the reversal remains uncertain. Burnham must still appoint ministers, receive detailed departmental advice and decide how any new policy can withstand judicial review. His first statements will be examined for whether he promises unrestricted expansion, a limited programme tied to existing infrastructure or a conditional approach linking production to emissions reductions and investment in new energy industries.
What is already clear is that the North Sea has become an early test of the incoming government’s political identity. Burnham is being asked to satisfy industrial workers, energy companies and voters concerned about imports without abandoning Labour’s climate commitments or reopening legal vulnerabilities. The eventual policy will reveal whether his administration views continued drilling as a temporary component of a managed transition or as a wider strategic reset of British energy policy.
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