Submission to the Economy and Fair Work Committee’s Inquiry on a Just Transition to net zero for the North East and Moray
The Just Transition Partnership welcomes the opportunity to respond to the Committee’s inquiry on Just Transition for the North East and Moray. Our response presents arguments to show that:
- too few jobs are being created from the transition to renewable sources of energy
- in particularly, there is systemic failure to gain supply chain jobs from new renewable energy investments
- there is too little progress in enabling workers to re-skill and move to renewable energy and other jobs
- conditions for and monitoring of successful bids for the Just Transition Fund (JTF) are insufficient to provide evidence that the fund will accelerate a fair decarbonisation of the local economy.
We believe that the current market-based approaches to energy and the neo-liberal foundations of industrial policy are failing; and that a completely different approach based on public enterprise and extending public ownership is required.
Failure to create jobs from climate action is letting down Scotland and the North East
The impressive growth in generation of electricity from renewable sources in Scotland has resulted in a depressingly small number of jobs in manufacturing and fabrication. This has been clearly set out in the STUC’s Broken Promises report1. Despite a rise in employment in the low carbon and renewable economy between 2020 and 2021, the number of jobs created for every £1m turnover in offshore wind project has fallen dramatically since 2014 from 7.37 to 1.20. Offshore wind companies are recording rapidly increasing turnover in Scotland, while job numbers are nowhere near this pace of growth.2. According to recent analysis “typically, a UK offshore windfarm turbine has more than three times as much material content in it from abroad as it does from domestic manufacturers”3.
There were high hopes that ScotWind, the next phase of investment in offshore wind, would bring a change – substantial investment in supply chains in Scotland. Developers were required to submit Supply Chain Development Statements. However analysis of these gives rise to well-founded fears that even the ‘minimum commitments’ in these amount only to aspirations and may well not be achieved4.
The North East of Scotland needs a planned and just transition. The development of renewable energy generation and its supply chain can provide a large pool of jobs into which oil and gas workers can progress5. The Committee and the Scottish Government should recognise that this is not happening at the pace and scale needed and understand the reasons for that.
Market-based public policy is failing
These failures are clearly systemic. It is important that the Committee look at each stage at which public policy has failed to secure the jobs and other benefits which the public was led to expect – for example, the Contracts for Difference, the ScotWind auction, the saga of BiFab. However we want to draw attention to two common threads which run through all of them.
The first is the neo-liberal assumptions which are the common foundation of economic, energy and industrial policy in the UK, including Scotland – that public objectives are to be delivered by profit-led corporations and that market-based mechanisms are the best basis for decisions about how to implement public policy. These assumptions about where responsibility for socially vital investments should lie are particularly perverse when attention is given to what is known about the weaknesses of the Scottish economy in that respect.
That is the second thread – the chronic underinvestment in industry and infrastructure. When it is known that “Scotland has one of the lowest rates of investment in the OECD”6 it becomes less surprising that Scottish businesses are often unable to compete effectively for supply chain contracts. This argument applies to infrastructure as well – if port facilities and transmission infrastructure are not up to scratch, even the genuine intentions of ScotWind developers to site production in this country will be hard to realise.
In summary we believe that it is this systemic underinvestment and the market-based structure of procurement and regulation which has led to most of the benefits in terms of jobs and of profits flowing out of Scotland.
The need for a clear and decisive Just Transition Plan for the North East and Moray
The approach of favouring private enterprise to deliver on just transition objectives has been inadequate. The public sector must now lead the implementation of public policy. This requires the parallel development of a) coherent plans b) sufficient investment and c) public enterprises which have the capacity and scale needed to lead transformational changes.
The intention of the Scottish Government to create Just Transition Plans for every sector and region is to be applauded, but it is worthless if they are not sufficient for the task, or if their execution relies on decisions of the private sector. The draft Energy Strategy is a bad start, lacking specific enough targets and failing to present policy measures which can deliver the objectives. It asks more questions than it answers. Every effort must be made to improve on this to provide certainty and confidence to workers and communities in the North East of Scotland in particular.
Our investigations of the three sectors for which Just Transition Plans are currently in preparation provide concrete illustrations of these general points. For example, the contribution of Transport to a successful just transition will be built on the basis of an integrated public transport system rooted in public ownership – including bus services in the ownership of Aberdeen and North East local authorities through the North East of Scotland Transport Partnership. The investment needed for transformation of Agriculture and Land Use will be driven by public subsidies to forestry and farming, the reform of which should place public goods at the centre, not profitability of large landed estates. For the Construction sector, rapid development of the workforce and its skills needs a transformation away from the current practices which force most construction workers into self-employment and the creation of large municipal enterprises and direct labour organisations can be the foundation of this.
For the North East and Moray, there is an urgent need for a regional just transition plan, and for that planning process to be taken down to city and community level as well. At present there is no plan and we are concerned that we can find no indication that one is in preparation. It will be necessary that such plans address the investment gap, set out how much investment is needed and show how that can be secured to deliver a just transition with new, good quality green jobs and extensive community benefits. This of course should cover all sectors, including e.g. transport and housing, not just energy generation. The Plan should provide the framework for the allocations of the Just Transition Fund.
Successful regional transformations in the past have been led by the public sector (e.g. Scottish Hydro, town gas conversion). Local authorities should be empowered to follow such examples and create municipal enterprises for the purposes of home energy insulation retrofit. In this they should be supported by dynamic national public enterprises including a Scottish energy company and an expanded Scottish National Investment Bank. The private sector will have an important role here but the public sector should create the framework for it and the conditions which it must comply with.
The Just Transition Partnership has set out its views about the development and content of Regional Just Transition in its submission to the Committee’s Inquiry into Just Transition for the Grangemouth area7. The key points in that are in large part equally applicable to the North East and Moray. The creation of this plan must be taken as an opportunity to stimulate debate about the just transition and participation by the affected workforce and the most affected communities.
In the absence of central or local government leading this planning process, the best contribution regarding the content of a just transition plan has been made by the Our Power report8. This was prepared through dialogue with offshore workers by Friends of the Earth Scotland and Platform and supported by major trade unions. We commend this to the attention of the Committee.
The Just Transition Fund is not sufficiently transparent or accountable
The Partnership and its members have applauded the creation of the Just Transition Fund for the North East and Moray. However, we are sceptical that the current process and monitoring is sufficient to assess whether objectives are being met. It is concerning that there is insufficient information available to the public and more fundamentally that there is no regional just transition plan which can guide its deployment.
The 24 allocations made in the first year of the Fund’s operation amount to £50 million which is one tenth of the total. In their applications, 10 projects had ‘emissions reductions’ as one of their milestones. 20 projects had ‘job creation’ as one of their milestones; 18 projects had ‘community benefits’ as one of their milestones (from Scottish Government reply9 to our Freedom of Information request). However, there is no publicly-available information which quantifies these outcomes and therefore no realistic route for assessing their success in achieving them.
It is therefore hard to assess the Fund’s contribution to leading the just transition of the region. Moreover, significant concerns have been raised about the extent to which the Fund has in reality outsourced the delivery of important objectives to business-led organisations with little if any ongoing scrutiny10.
The award of money from the Just Transition Fund should be clearly dependent on the commitment to specific outcomes, and a requirement to report on progress to deliver these. Yet if this fund was to be meaningfully driving forward just transition in the region, it would not have stopped there. Commitments to create new jobs should have included questions on the quality of those jobs in terms of pay and security, as well as the opportunity for trade union recognition. Community benefit should have been clearly defined in terms of quantity but also in relation to wider equality issues in the region and ensuring benefits are targeted into low-income communities.
In the second year, £25 million has been allocated to the Scottish National Investment Bank “to be invested in the region on a commercial basis, in line with the Bank’s Investment Strategy and its Missions including to support a Just Transition to net zero”11. Again, there is no information available about the precise terms of this contract and the outcomes on which it will be assessed.
From our investigations we find that the administration of the Fund is not sufficiently transparent for the necessary degree of accountability. In particular it appears that there are no mechanisms for accountability to the representative bodies of the people of the area, the local authorities. We believe that the Scottish Government should learn from examples in other countries of similar funds and in particular the EU’s Just Transition Mechanism where commitment of funds is based on agreed regional plans. These plans include clear additionality tests and mechanisms of accountability to the areas affected. Taking this path would mean that the Regional Just Transition Plan should guide the use of the Fund; and that further deployments should follow on from the creation of that Plan.
Too little progress in enabling workers to re-skill and move to renewable energy and other jobs
While job numbers in the low carbon and renewable economy remain disappointingly low, those jobs which have been created are not sufficiently open to people working in existing high-carbon sectors. A transition will affect a number of different sectors and many workers will need to redeploy their existing skills experience into alternative industries or develop their skills further to adapt to new products and processes.
At present, support for workers is almost entirely absent, despite a commitment from the Scottish Government to “design and implement a skills guarantee for workers in carbon-intensive sectors”12. There are no clear pathways for workers to access targeted support on the basis of delivering a just transition, outwith existing generic employment support programmes. The burden of finding jobs in green industries, undertaking the necessary training, and analysing how transferable existing skills and experience are to other sectors, is with workers themselves.
There has been progress to address barriers to workers transitioning into new industries, in the form of an Offshore Training Passport. This has long been a demand of workers in the offshore energy sector, many of whom are self-employed and pay their own safety training costs and would currently have to duplicate their existing safety training with no recognition between offshore oil and gas and offshore wind. However, trade unions representatives involved in the development of the Passport have criticised the Global Wind Organisation for obstructing the process by “putting in place roadblocks”13. This passport represents an opportunity to standardise safety and technical standards in the energy sector as far as possible while maintaining the highest possible health and safety standards. This would open opportunities for workers across the energy sector to access new jobs and sectors without repeating their qualifications at personal cost.
The costs of retraining workers should fall on employers, or where this is not possible, on government, to make sure individual workers have paid time off work to train and do not have to pay their own money for training. Individual, tailored support should be available to workers who wish to retrain. Retraining pathways must be in line with the needs of a zero-carbon future as well as with existing skill sets. Therefore, skills audits and forward-looking forecasts should be conducted on the UK and Scottish level, both holistically and with a sector focus. Such audits should become the basis of government action plans for how to support the workforce-wide transition.
1Broken Promises, STUC 2019
2Analysis of ONS Low Carbon and Renewable Energy Economy data for 2021, STUC 2023
3Why don’t more Scots work in wind power? Ewan Gibbs 2023 https://www.futureeconomy.scot/posts/43-why-don-t-more-scots-work-in-wind-power
4Scotwind: One Year On, Common Weal 2023
5Powering Up The Workforce, Robert Gordon University 2023
6What is the role of investment in delivering the just transition, Laurie Macfarlane 2023 https://www.futureeconomy.scot/posts/42-what-is-the-role-of-investment-in-delivering-a-just-transition
8 Our Power: Offshore Workers’ Demands for a Just Energy Transition, Friends of the Earth Scotland and Platform London, 2022
12 Just Transition: A Fairer, Greener Scotland, Scottish Government 2021