Since Shell tried to scuttle an oil storage buoy off the west coast of Scotland in 1995, energy companies have had to dispose of offshore installations on dry land when they’re decommissioned.

Shell’s plan to sink the redundant Brent Spar caused outrage on environmental grounds. Greenpeace activists boarded it from a helicopter and drivers boycotted Shell petrol stations. Forced into a U-turn, Shell towed Brent Spar to a Norwegian fjord, where it was dismantled at almost ten times the cost. Three years later, governments of the northeast Atlantic region agreed to ban the at-sea burial of installations for good.

Under rules dating back to 1975, taxpayers pick up roughly half the cost of scrapping offshore structures when they go to the big oil field in the sky. The forecast decommissioning cost for the entire North Sea moves around depending on levels of activity and efficiency gains, but it stood at £40 billion last year, according to the government-owned North Sea Transition Authority. The exchequer will be on the hook for about £20 billion in the form of relief on operators’ past and future taxes.

That bill will start arriving a decade sooner than it might have done if Ed Miliband, the new energy secretary, goes ahead with his promise to soak the North Sea oil and gas industry.

Labour’s manifesto vowed to increase the Conservatives’ windfall tax on profits, bringing the total to 78 per cent; take away “unjustifiably generous investment allowances”; and stop issuing licences for new exploration. It said the extra windfall tax would reap £1.2 billion a year, or £6 billion over this parliament, which would go towards funding state-owned GB Energy.

The North Sea had two booms, in the mid-80s and the late-90s. It has gushed net tax revenues of more than £300 billion and in its heyday accounted for more than 10 per cent of all government receipts. It has been in decline for years, but accelerating that would be economically and environmentally illiterate.

Contrary to perceptions, “majors” such as Shell and BP make up just 30 per cent of North Sea output. Most sites are now owned by smaller quoted companies such as Harbour, Ithaca and Serica. Hitting them with higher tax and withdrawing investment allowances would result in production and job cuts, most of them in Scotland. Analysts at Stifel say Labour’s extra windfall tax would raise a maximum of £5 billion because it would force the sector into “rapid decline”. After an initial spurt, it would result in a lower tax take.

Choking off domestic supply of oil and gas while it is still in demand would simply offshore emissions. The best argument is a flimsy one — that it would give the UK greater moral clout to urge other countries towards net zero and add to the ostracisation of fossil fuels.

The above is fairly well-trodden ground. Less fully explored has been the impact that the North Sea’s premature demise would have in terms of decommissioning costs. Stifel reckons Labour’s plans would shift the pattern of payments forward by about ten years, with a big spike in the early 2030s. It says that from about 2040, the government would be paying more to the oil and gas industry in tax relief than it received in revenues — as it did in 2016-17, when falling commodity prices made the North Sea a net drain for the first time.

In an era when chancellors scrabble around for single-digit billions of “headroom” in fiscal forecasts, the advancing of a £20 billion outlay matters. There is also what PR people would call “optics”. If Labour wins a second term, is it going to be happy seeing billions of pounds flow out to evil oil and gas companies? Consider that in light of former justice secretary Alex Chalk’s comment last week that in straitened times, new prisons had to be weighed against new hospitals.

There would be a temptation to renege on the payments. That’s where the industry and the last government saw this one coming. In 2013, to give North Sea operators confidence that the decommissioning regime wouldn’t change in the future, Sajid Javid as economic secretary to the Treasury announced a new arrangement. The government would enter into legally binding deeds with oil and gas companies guaranteeing them decommissioning tax relief at 2013 levels in perpetuity. Within five years, the Treasury had signed more than 80 deeds, according to the National Audit Office. A deed has been called on at least once: in 2017-18, the Treasury paid £45 million to one operator and set aside a further £299 million for future years.

An oil and gas veteran says any government attempt to cancel these deeds would be “horrible”. But the companies would probably win in court.

To be fair, all this was a known fly in the oil barrel. Miliband is only doing what he said he’d do in opposition. I backed Labour at this election because the Tories needed to go. I could swallow this fly — and another, Labour’s workers’ rights package — for the greater good.

But it is worth thinking about — not just because of the implications for taxpayers but because it prefigures inevitable tensions to come between idealists such as Miliband and realists such as chancellor Rachel Reeves. We must hope the latter camp wins out.

Starmer’s goat-herding

To end on a more positive note, Sir Keir Starmer has made some excellent external appointments — notably Sir Patrick Vallance as science minister and James Timpson on prisons. Varun Chandra, boss of intelligence firm Hakluyt, is thought to be set for a business role. Sir Nigel Wilson, the former Legal & General chief, would be helpful on housing. It’s reminiscent of Gordon Brown’s “government of all the talents”, known as the “goats”.

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