Source · Select Committees · Scottish Affairs Committee
Recommendation 14
14
Accepted in Part
Clarify inter-governmental delivery, duration, and long-term financing for the Oil and Gas Transition Training Fund.
Recommendation
The forthcoming transition plan should set out how the UK and Scottish governments will work together to deliver the Oil and Gas Training Transition Fund. It should clarify the duration of the funding available and the degree of UK Government involvement in the scheme, to ensure sufficient accountability at a UK level. In its response, the Government should outline whether it has considered how co-investment plans with the private sector or the revenue generated by the Energy Profits Levy could finance the transition fund in the long term. (Recommendation, Paragraph 99)
Government Response Summary
The government partially agrees, announcing the Oil and Gas Transition Training Fund will be extended until 2028-29 with up to £18m jointly funded by UK and Scottish governments, and opportunities for private investment will be explored. However, it explicitly rejects using Energy Profits Levy revenues for long-term funding due to fiscal sustainability concerns.
Government Response
Accepted in Part
HM Government
Accepted in Part
The government partially agrees with this recommendation. As set out in the Clean Energy Jobs Plan, the Oil and Gas Transition Training Fund will be extended and expanded from 2026–7 to 2028–9 with up to £18m provided by UK and Scottish Governments. We will also be exploring opportunities for additional private investment. The current Oil and Gas Transition Training Fund is jointly delivered by UK and Scottish Government with Skills Development Scotland as delivery partner. UK Government were actively engaged in the design and scope of the fund and are monitoring delivery. The UK and Scottish Governments are committed to working together to deliver the expansion. We will share further information on the scope of the Transition Training Fund in due course. The government is committed to managing the North Sea in a way that ensures a fair, orderly and prosperous transition, while recognising domestic oil and gas will continue to have a role in the energy mix for decades to come. On tax, we are taking a responsible and proportionate approach which recognises the ongoing role of the oil and gas industry and workforce in our current energy mix while ensuring the sector contributes more towards our energy transition. While the Energy Profits Levy (EPL) remains, the regime continues to provide attractive tax relief for investment of up to around £84 for every £100 of private investment, with even more tax relief (up to £109) for investment in decarbonisation activities such as electrification. However, the Government would have considerable fiscal sustainability concerns with regards to the use of taxation revenues from oil and gas production profits for a hypothecated fund for the energy transition in the long term. This is mostly due to the expectation that production from the basin will continue to decline over the longer-term and because of the significant volatility of projected oil and gas receipts, which depend on a range of factors including commodity prices and wider market conditions. Given this, earmarking revenues this way significantly limits the Government’s ability to manage the public finances flexibly.