Keir Starmer has announced £200m in funding to boost investment at Grangemouth oil refinery, which is closing down with the loss of more than 400 jobs.
The prime minister said the national wealth fund would provide £200m in state investment for up to five companies who moved to Grangemouth, where several thousand jobs in the wider supply chain are also at risk. He said that should leverage up to £600m more in private investment.
Speaking to reporters after his announcement at Scottish Labour’s annual conference, he rejected suggestions this had come too late for the scores of Grangemouth workers recently given redundancy notices, or those who will be laid off in the coming months.
He said Labour had acted as quickly as it could, but it took time to work up a credible proposal. “It’s very easy to put proposals on the table that don’t hold water. What I want to do is take the time to do this properly,” he said.
“We’re not talking about just a sort of something that tides people over, not something for the next three or four years. It’s a generational opportunity for Grangemouth.”
The crisis at Grangemouth has quickly become the biggest political headache for Labour in Scotland: trade union leaders have accused the UK government of failing to act quickly enough, and union members demonstrated outside the party conference in Glasgow on Friday.
Labour ministers privately accuse the former Conservative government and Scottish National party ministers of being largely inactive despite knowing Grangemouth was due to close. Soon after the election, it announced a £100m growth deal for the region agreed with the Scottish government.
Labour’s popularity has slumped in Scotland since it scrapped the universal winter fuel payment, refused to compensate Waspi pensioners, hiked national insurance and the party was caught up in rows over undeclared gifts to Starmer and Rachel Reeves, the chancellor.
With Scottish Labour now as low as 18% in the polls, it faces the prospect of a humiliating fifth successive defeat at the hands of the SNP in next year’s Holyrood election. Grangemouth’s fate will heavily influence votes in nearby seats.
Last week, John Swinney, the first minister and SNP leader, added to the pressure by announcing a further £25m in Scottish government funding for a Grangemouth “just transition fund”, to add to £7.8m in its budget.
Trade union leaders have urged both governments to invest heavily in new technologies such as sustainable aviation fuel and biofuels in Grangemouth. They see it as a substantial test of Ed Miliband’s claim the UK government is investing in a fair transition away from fossil fuels.
The Unite general secretary, Sharon Graham, has urged Starmer and Miliband, the UK’s energy and net zero secretary, to temporarily take over Grangemouth from its owners, PetroIneos, to stem job losses before then converting it to produce green aviation fuel.
UK ministers said there were significant regulatory and technical issues blocking the immediate development of green aviation fuel in the UK, due to it being neglected by previous governments.
Miliband said Starmer’s announcement showed the UK government was serious about securing a viable future for the plant, which is Scotland’s last oil refinery. “We have always said that we will leave no stone unturned in seeking a sustainable industrial future for Grangemouth and its workers,” he said.
Roz Foyer, the general secretary of the Scottish TUC, said the £200m could not be dismissed lightly, but castigated the government for rejecting Graham’s proposals. “This must be the priority from all governments, not retrospective action that assumes the closure of the site is inevitable,” she said.
