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Simon Jack
This BBC podcast is supported by ads outside the uk. This message comes from Schwab at Schwab. How you invest is your choice, not theirs. That's why when it comes to managing your wealth, Schwab gives you more choices. You can invest and trade on your own. Plus get advice and more comprehensive wealth solutions to help meet your unique needs. With award winning service, low costs and transparent advice, you can manage your wealth your way at Schwab. Visit schwab.com to learn more. Puerto Rico is having a moment of
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Chris Mason
global attention as companies reshore and rethink supply chains. They're choosing a U.S. jurisdiction operating under
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Simon Jack
federal law with competitive tax incentives designed
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Chris Mason
for long term growth, not culture or business.
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Simon Jack
Culture and business. Puerto Rico.
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Chris Mason
It's not what's next, it's where.
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Simon Jack
Visit investpr.org business
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James
Chris when did tranche or tranche, if you will, become the go to word for a pile of documents?
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Chris Mason
Well, it entered my vocabulary about 20 past 7 this morning on the radio. Actually about 10 minutes before when I thought am I sure how to actually pronounce this word? Because I'm tempted to say tranch but rather than tranche. And then I googled it and it's French, which I should have perhaps realized and polite giggles in the newscast studio. But it is a tranche. It is a tranche day, isn't it?
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James
A dollop of documents.
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Alex
You also I've been trying to think of other alternatives to the word tranche all day.
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Chris Mason
Well, my googling this morning threw up portion and slice of synonyms. Chunk, chunk, dollop. I like dollop.
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James
Digital data dump or something on the radio for six o' clock news, didn't you? Something like that.
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Chris Mason
A digital data deluge.
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Alex
Well, that is what we are going to talk about. We are going to talk about the first set of documents, the first tranche, if you like, of documents that have been released relating to the appointment of Peter Mandelson, Lord Mandelson, as U.S. ambassador. And we shall do that on this episode of Newscast Newscast, Newscast from the BBC.
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Simon Jack
Fat Boy Slim and me in the
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Chris Mason
classroom doing our violin lessons.
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James
I was the tattletail in the class.
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Simon Jack
Can I have an apology please?
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James
I trust almost nobody.
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Simon Jack
Then daddy has to sometimes use strong language.
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James
Next time in my mosque.
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Alex
I feel dulu with no salulu.
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Simon Jack
Take me down to Downing Street. Let's go have a tour.
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Chris Mason
Blimey.
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James
Hello, it's James in the Westminster studio.
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Alex
And it's Alex in the Westminster studio.
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Chris Mason
And Chris in Westminster too.
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Alex
And later in this episode we are going to hear From Simon Jack about the International Energy Agency, which has agreed to their largest ever release of oil reserves. But first, we have had the first release of papers relating to Peter Mandelson's appointment as U.S. ambassador. Chris, before we get into the substance, the detail, what they showed us, just remind us about how we got to this point of them being published in the first place.
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Chris Mason
Yeah, because you'd be sort of forgiven with all the news, the last couple of weeks of sort of forgetting about not necessarily the Lord Mandelson row. But you know what, where are all these documents coming from? Why are we getting stuff we don't normally get? So rewind. About a month, beginning of last month, Conservatives used this pretty obscure parliamentary mechanism called a humble address, and that means a humble address to the King to request documents. Now, normally when an opposition party tries that as a mechanic, it doesn't work because they haven't got a majority. But such was the kind of colossal sense of disgust, frankly, in Parliament about the revelations from the Epstein files that it was impossible for Labour at the time to try and oppose. And so it sailed through the House of Commons. I don't think there was a vote in the end. It was just acknowledged that that's what the Commons wanted. And this humble address said, look, the government should publish all sorts of documents relating to the appointment of Lord Mandelson as ambassador in Washing and then his time as ambassador in Washington. And then since then there's been a whole process of, oh, well, hang on, what can be published? And what about things that might be an issue in terms of intelligence sensitivity? What about things that might imperil the UK's international relations? In other words, the relationship with Donald Trump, in this instance, the Intelligence and Security Committee, which is a cross party group of MPs and peers that have security clearance have been involved in all of that. And then here comes tranche new. Actually, what would be the. I nearly said numero uno, but actually
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Alex
what was the French multilingual? You are.
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Chris Mason
Oh, I mean, absolutely. What would be the French for tranche number one?
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James
I'm not going to be doing any French. I could do you a tiny bit of Spanish. But you've done that already.
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Chris Mason
Have I?
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James
Okay, more or less.
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Chris Mason
So, yeah.
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Alex
And then.
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Chris Mason
So there it comes, 137 pages of. Of the government's answer to the honorable to the humble address.
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Alex
147, I reckon.
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Chris Mason
Well, it's 150.
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Alex
But then you've got the bits at the top which are like, this is the humble address. And then this is why we're publishing and this is your contents and anyway
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James
it's all digital, so pages, pages. How do you get this? How does this all work? Because you've both been working on this all day. Were you sitting, hitting refresh, you know, and then how'd you go through so much like, how is it all working here at Western Studio?
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Chris Mason
Were you an F5 merchant today on your keyboard?
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Alex
No, I actually read the whole thing top to bottom as quickly as I possibly could. Just did a thorough speed read of it. But we had in the BBC because we knew it was coming. Chris confirmed on Tuesday night that we were expecting to get this published on Wednesday. So there was a little bit of a heads up. So yeah, the BBC had just sort of in, in the Westminster team had assigned a couple of people to section up bits of the document. I think broadly people knew what we were looking for because obviously the reason that MPS wanted this published was because there was the question about that initial appointment of Peter Mandelson and was it the right one and what did that say about the Prime Minister's judgment and what was known and what wasn't. So we had a sense of what people wanted to see in these documents, what they may or might not shed light on. So we had people sort of sitting there. When the link came through from the Government, it got popped into WhatsApp group, so everybody kind of had it and then people were sort of divvying up bits of these documents to look out for, looking out for what it could show us about what was or wasn't known around the time of that appointment. But I took the really old fashioned old school version of just reading it all as quickly as I possibly could. Hurrah.
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Chris Mason
And so. And so did I. And actually, you know, unlike that stuff we got from the Department of Justice in the States that, you know, there were stories dripping out of for well over a week because of the scale this was, I mean, granted, north of 100 pages, but readable.
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James
But that was talking millions of people.
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Chris Mason
Exactly. This was readable if you avoided distractions like WhatsApp's pinging away in about half an hour, 40 minutes. Totally right to have a proper read of it and glean the, the broad gist of it.
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James
Well, I suppose we get to it then. What did we learn?
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Alex
You can break this down broadly into two kind of bits. So the first bit is about what this showed us and with the huge caveat that this is only a partial release because as Chris said, there is more to come. And when we get More, it might cast what we've seen today in a different light, or not, but it's just worth remembering that. But of what we've seen today, the. The two kind of bits are one, about the initial information, the due diligence that was carried out initially around Peter Mandelson prior to his confirmation as U.S. ambassador. And then there's a sort of separate issue about what happened after he was sacked and how much money he was going to get. But on that kind of first bit, the. One of key documents for me was that initial due diligence document that was compiled in December before his appointment was announced. And it lists effectively on there things like Peter Mandelson's past associations, his business dealings. And it lists some potential reputational risks, things like the role he had at Global Council, the consultancy firm he worked for, things like his previous resignations from government roles under the Blair Brown governments. And it also has a section there about his relationship with Jeffrey Epstein. And effectively in series of bullet points, it sets out what was known publicly at the time about that relationship. And it does make clear that the relationship between Lord Mandelson and Jeffrey Epstein continued after Epstein was first convicted of procuring an underage girl. It also references reports that, that Peter Mandelson stayed in Epstein's house while Epstein was in jail. So it sets out very clearly the government knew these things at the time of the appointment and it describes them as a general reputational risk.
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Chris Mason
I think what's interesting on a couple of levels about this. Well, two things. One is much of the content of those eight bullet points. I think they are on page. What was it? Page 11 of the document were things that were in the public domain that you could. That you could have found with a bit of sort of nifty Googling. The second thing I think, you know, which I think will be interesting to newscasters, is that, you know, I think overall these revelations today were sort of interesting rather than explosive. But what you do get a sense of, of with real documents that the Prime Minister saw of what it's like as Prime Minister, what is in. You know, we will frequently talk, James, as political reporters, Alex and I and others about, you know, ministerial red boxes, you know, the business of the red box. And this is the kind of stuff that confronts the Prime Minister the whole time. Advice that's presented to him or her and then they read it and they have to reach a reach a decision. Now, I think the intriguing thing around all this today is firstly, it's partial because we now know there is Going to be one extra. The government plans at the moment, one extra tranche to come within weeks. Now, whether weeks is two weeks or 13 weeks or whatever, who knows? But I'm told it's not days and it's not months, it's weeks and it'll come in one go. Now, potentially, that could be really, really big. But let's see what's deemed, you know, admissible to be. To be published. There's also the sort of nagging thought I have with stuff like this, which is that you get this fascinating insight into. Into what goes on, which we don't normally see, but what do we not know that we don't know? So what, for whatever reason, has not emerged. Firstly, this is the stuff that was written down so you don't know about. There's references sometimes to informal conversations. I'm always fascinated by that. Oh, yeah, yeah. Oh, yeah. No, there wasn't a meeting, but there might have been some informal conversations about whatever. And you think, yeah, I mean, a lot of business gets done in corridors, so, you know, there's all that kind of stuff. And then crucially, what we didn't get today, because that's really key.
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James
Well, let's say just one thing about that and then maybe we will talk about the severance pay as well. But just on that. Dallon Jones in the Commons, Chief Secretary to the Prime Minister, said the Metropolitan Police had asked the government not to publish certain documents, as you were saying, Alex, in order not to prejudice its criminal investigation. Lord Mandelson was arrested last month on suspicion of leaking sensitive government information while serving as Business Secretary during the last Labour Government. And Lord Mandelson has repeatedly let it be known that he believes he has not acted criminally, he did not act for personal gain and he is cooperating with the police. That's his position. This is Darren Jones's position. We can have a listen to it now. On newscast in his statement to the House.
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Darren Jones
Whilst the documents point to public reports of an ongoing relationship between Peter Mandelson and Jeffrey Epstein, the advice did not expose the depth and extent of their relationship, which only became apparent after the release of further files by Bloomberg and then the United States Department for Justice after the Prime Minister reviewed the Cabinet Office due diligence, that noted public reporting on Peter Mandelson's relationship with Jeffrey Epstein. Questions were put to Peter Mandelson by advisers in number 10, as Right Honourable and Honourable members can see, referred to on pages 8 and 94 of the bundle. And Peter Mandelson responded, these are matters that are currently the subject of an ongoing police investigation. And we will publish this document when the investigation allows. When we do, the House will be able to see Peter Mandelson's answers for themselves, which the Prime Minister regrets believing so effectively.
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Alex
The Government's argument at this point is twofold. They are saying once again that they didn't know at the time the breadth and depth of the. The extent of the relationship between Lord Mandelson and Jeffrey Epstein. They're also making the argument that because they can't release all of the documents they say they want to at this stage because of the ongoing police investigation, that there might be some follow up documents. And particularly this relates to the fact we understand there were questions that were asked after that initial due diligence process about that relationship between Lord Mandelson and Jeffrey Epstein. We don't know the specifics of what the responses were. And that's still a real point of contention because the Prime Minister effectively says he was lied to or they were lied to and Peter Mandelson says hang about.
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Chris Mason
No, exactly. I mean, right at the heart of this in terms of the political contention is precisely that. And it's one heck of a claim, isn't it? A Prime Minister publicly claiming that his former ambassador in Washington lied. That's one heck of a claim.
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James
And not only that, a guy who's been at the heart of that party's project for decades and decades. Back to Neil Kennedy in the 1980s.
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Chris Mason
Exactly. And a claim of that gravity playing out publicly and what we got today neither verifies the Prime Minister's claim nor verifies the claim that Peter Mandelson makes, which is that, no, he believes that he answered all of the questions around the vetting process truthfully and fully. Now, as Alex says, the argument ministers make is the reason for that is the documents that would get into all of that and the government believes would verify their claim. We wait to see if they do. The police, so the argument goes, don't want to see the light of day yet because they fear it could prejudice any future legal proceedings involving Lord Mandelson. So on that central claim, we are still none the wiser. And you do wonder at what point down the track we do get to those documents because obviously we don't know the longevity or otherwise of the police investigation. They are regarded as part of tranche one rather than, if you like, tranche two, which is still to come. So it's possible you get tranche two and we've still not got these documents.
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James
And if you're a newscaster listening to this, there's a very practical sense in which this affects you beyond the principles involved because your money has been used here, taxpayers money has been used to pay Peter Mandelson on leaving his role, £75,000. That's another email in the files tells us that, doesn't it, that the treasury agreed a settlement of £75,000 with Peter Mandelson who'd asked for more than half a million pounds. He wanted several years salary, didn't he?
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Alex
Well, that's what the documents suggest. So the documents include effectively reports of conversations that suggest that Peter Mandelson thought he might be entitled to something in excess of 500,000 doll, which would have been the salary he would have received for that fixed term position over the subsequent four year period. The documents also suggest and report conversations that he might have been consulting senior lawyers about his rights as a sort of dismissed employee at that stage. Now Darren Jones in the House of Commons repeated that and said that Peter Mandelson had asked for a final settlement in excess of what was ultimately agreed at that £75,000. Mark that still that, that that final severance pay still came in for some hefty criticism from political opponents who suggested that none of that should have been paid. Darren Jones ultimately said he thought it should be donated to charity. But you've also had a bit of a sense of this as well.
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Chris Mason
Yeah. So my understanding is Lord Mandelson's view is that he never requested or demanded the sum £547,201 and that very quickly in the conversations he was having with the Foreign Office they arrived at this much lower figure of £75,000. My understanding is also that he never had any intention of pursuing an employment tribunal, which clearly some folk in government were fearful was one potential outcome. But what we know from these documents is what people in government concluded might happen rather than testimony, written testimony from Lord Mandelson that says this is what he was demanding. So it's the government's claim that he may have been wanting or began with a request, as it says on page 111. Negotiations began with a request by the individual to pay out the remainder of the four year salary costs of the fixed term appointment, by the way, on just a small matter which people might be able to relate to in their own, in their own experience. The. And this isn't surprising but I just think on a human level it's quite interesting, the change in tone around the references to Lord Mandelson. So it's very human. Early on, well done, Peter. It's all, you know, welcome to that. We're going to onboard you, that horrible verb. But anyway, you know, welcome to the team, all that kind of stuff. And then you fast forward 100 pages and it is the individual that is interesting.
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James
But another thing I think newscasters might be wondering is if I. Look, let's. We've said Peter Mandelson disputes that he should have been fired, Right. But taking the government's argument that we had to, we thought we had caused the fire this man from this job because in their view, he had lied to them in his application, which he denies. But if you're listening to this, do you not think, sorry, wait a minute, is this normal down here in Whitehall, that you get fired and they give you 75 grand? Who gets 75 grand when they're fired? Why is that?
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Alex
And that was a point that was raised by actually several MPs, and not just opposition MPs, but a couple of Labour MPs actually stood up in the House of Commons and raised that very point, that very question. Question, you know, and another couple of Labour MPs did also make that. That sort of broader point, which I think you're alluding to. About the sense of. Of what? I mean, take away the kind of detail, the claim, the counterclaim, the rights, the wrongs, the who knew what, when, why and all of that. The references that were being made in the House of Commons to this sort of broader sense of the way the world operates at these kind of high levels of power and government is not necessarily a way that many people will be able to relate to. And I think when you look at some of this, I think you do get the sense of that as well.
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Chris Mason
Otherworldliness of the political world, this place
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James
versus the real world, you know, and on that, I mean, the government's position, correct me if I'm wrong, Chris, seems to be that this was the, although it sounds mad to say it now, the most efficient use of taxpayers money, because their feeling was that they might have to pay out a lot more if they didn't pay this amount of money. But isn't the point there that there's a moral consideration there about. In spending public money, it's not only about how much you spend, but who you give the money to and what you spend it on? That is, you know, it's one thing to use it to defend what you believe to be a fair, legal and morally proper decision in court. It's quite another to say, well, we think it's going to cost us more. So we'll just give this guy the money.
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Chris Mason
Anyway, I was just doing a control F to check a phrase that I remember reading about three hours ago, but I wanted to check I was quoting accurately on exactly this point. So, the 6th of October 2025, a letter from Ollie Robbins, who was the top civil servant in the Foreign Office, to James Murray, the Chief Secretary to the Treasury. This is around the severance payment subject special severance payment concluding £75,000, paragraph two, quote, this represents good value for money. So that was the argument they were explicitly making and therefore speaks to the concern that they had, fair or otherwise, or reasonable or otherwise, that the alternative from the taxpayer's perspective could be much worse if this ended up either involving lawyers or it goes to a tribunal or indeed anything else. And this rewinds all the way back to something right at the top of all of these documents, which was the advice the Civil Service gave around a political appointment in this job, irrespective of who it was completely that that is just higher risk for a Prime Minister because it is somebody you are picking for political reasons, as opposed to a frankly more anonymous career diplomat who, everything else being equal, would likely have a far lower risk profile and be much less likely to be somebody who is blown out of the job months in and gets into all this kind of.
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Alex
And it's just worth a final sort of other point that came out of these documents today was there was a note included in there from Jonathan Powell, who is now Sakir Starmer's National Security Advisor, when he refers back to the process that was taking place at the time around the appointment of Peter Mandelson. And he calls it unusual and weirdly rushed. And I think that's getting quite a lot of attention. It doesn't really elaborate in the documents beyond that, but that in and of itself is getting quite a lot of attention because of course the central point about this is still comes back to the judgment at the time as to whether it was right or wrong to have appointed Peter Mandelson. Clearly there's a lot of hindsight now, but was that the right call in that moment?
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Chris Mason
Completely. And remember, the context around the context was just to state the obvious, but it's worth remembering cause you should say there is a bit of hindsight bias, I think, at the moment, inevitably, given what we've learned, since that wasn't known then, which is this was a government determined, desperate to have a workable, viable, positive relationship with Donald Trump, a president like no other. And so the decision was taken. You need to make an appointment like no other. And they thought that Peter Mandelson, with his political skills and his connections and his contacts, was the person to be the person to woo Donald Trump. So that contributes towards the explanation of the timeline. They had an ambassador who was due to leave at just the point, Lord Mandelson, just the point. Donald Trump was about to have his second inauguration. They needed to act quickly, they felt, and they thought Lord Mandelson was the man that they needed. Boy, does the Prime Minister regret it. But that was the logic, and outwardly, certainly from his perspective at the time, the sensible logic that led him to that judgment.
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James
Yeah. And if I'm a diplomat, newscaster, listener, I'm thinking should have stuck to the professionals is what I'm thinking, probably. Chris, thank you very much.
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Chris Mason
Tar.
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James
Now, we promised you Simon Jack, and this afternoon we got the news that the largest ever release of oil reserves had been agreed by the International Energy Agency.
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Alex
Yeah. Because we were talking on newscast on Monday, I think it was, James, about the pressure that the war in Iran is causing on the cost of oil because of all the disruption to supply routes. And the cost of a barrel at one point went above $100 a barrel, which is a benchmark that people kind of look out for. So now this International Energy Agency, it's a tongue twister.
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James
The iea.
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Alex
Yeah. And all of its member countries, they are hoping, they are planning to release some oil, hoping it's going to ease the pressure on the market. That's my kind of basic understanding.
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James
I think that's correct. But Simon, Jack knows. And earlier we were joined by Simon in the main newscast studio to help us understand, understand how this all might work and what it means for the oil industry, too. Hello, Simon.
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Simon Jack
Hello, James.
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James
Right. You are a very, very busy person
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Simon Jack
today, like many people, I have to hear.
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James
Yes, but you're particularly busy. So let's get on with this. And I need you, please, to tell me, first of all, what is the organization that I find hard to say, the IEA. The IEA.
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Simon Jack
IEA, the International Energy Agency. It's got about 150 members and it is sort of the collective to sort of coordinate responses to the kind of crisis we've got right now. And so what has been emerging over the last couple of days is that the countries who are members, all of them are obliged to hold 90 days of oil supply in reserve, earmarked especially for crises like these. The UK does it and many other countries do it as well. And in certain circumstances, they can release this into the market in order to try combat price spikes, shortages, et cetera. And that's what we've seen. So we've seen, for example, Japan said they might go a little early. We've seen Germany saying they're going to do it. And in the last hour or two, the UK government confirmed that it will release 13 and a half million barrels of oil stocks into the market as part of a total of 400 million for all the IEA members. And that would make it the biggest ever release of oil stocks in the IEAS. I'm just trying to figure out 1974 to now, 52 years history. We've seen. We saw it did it twice during the Russia, Ukraine crisis, It did it during Libya. They've been a couple, but it's pretty rare. And this is the biggest ever.
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Alex
So, Simon, I mean, they were sort of been talking about this for a couple of days because of all of the disruption that we've seen to oil supplies. I just wanted to give it a bit of context. You're saying this is like the biggest ever, but what will that actually do? Like, how will it help ease the pressure? How long does that sort of. Of level of supply last? You know, what kind of practical difference is it going to make?
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Simon Jack
Okay, so in, in arithmetic terms, 400 million barrels of oil is about four days worth of global supply. We, the planet uses about 100 million a day. Now. It's a really good question, Alex, because in a way, it's not as if there's some big reservoir where this is all kept and you just open the gate, it all comes sloshing out. What happens is that the companies and the countries which have earmarked these stocks and in the uk, they're all over the place in Scotland and Wales and whatever in the. They're in big caves in Louisiana and Texas. What they do is they make it available to the market. So refiners who make petrol and jet fuel and other things can then basically order it. But the problem is, is that there is a bit of a refining bottleneck in capacity. So it's not as easy as just saying that doesn't become petrol overnight. It's gotta be refined. And that is why it's generally seen as, in a way, more of a kind of signal that, listen, we're thinking about this, we understand there's a problem. We've all got together, the G7, the IEA, et cetera, the EU, and we realized, and we're trying to act in a coordinated way. So in a way It's a kind of sentiment boost. It's a reassurance rather than a physical solution to this. And because 400 million is about one third of the total global amount in the oil reserve, it's not a card you can play very often. So I think it's going to be super fascinating to see, as we now know, it's beginning to happen. What the impact is actually going to be on the. On the oil price. It's a bit like if a Astra droid is hitting towards Earth and you've got one shot at it with a nuclear weapon or something. If you miss, then what? So I guess is the question, is
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James
it too early to say whether they have missed? I mean, the time now is 22 minutes to 4 in the afternoon on Wednesday. So this has just happened, right? The oil price nudged $120 a barrel the other day, dropped back. Where is it now?
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Simon Jack
So it went from 120 at the height of the frenzy, it came all the way back down to 81. When Donald Trump said that he thinks he's pretty much done. Victory's almost complete. At the moment, it's at about $90 a barrel. Helped in part, I think, because people were expecting this coordinated action to happen. So at the moment, $90 a barrel is expensive. Remember, before all these hostilities began, it was at 72. So by my maths, that means it's up 25%. So that is not crisis terms. But clearly it's still. I was just talking to an energy boss actually, a couple of hours ago, and they're saying, look, if this goes on for another six to eight weeks, then you have a genuine problem. But at the moment, people are thinking maybe you can get some out through pipelines from Saudi Arabia, maybe there's going to be some military escorts. You know, you had that sort of fiasco where Chris Wright, the Energy Secretary in the US Said, we've escorted a vessel out. And then they said, oh, no, we didn't. So all of that's going on at the moment. So at 90 a barrel, it's expensive, but it's not the kind of crisis levels we saw last week.
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Alex
It's so interesting, Simon, because from what you're saying, this decision to release these reserves is in part to do with sentiment, it's in part to do with this kind of trying to. To, I guess, tell me if this is a wrong way of phrasing it, but, you know, kind of make the markets know there's an effort collectively going on to keep a kind of supply coming. And we also saw when Donald Trump was talking about where the war in Iran is at, that was widely interpreted as him trying to kind of calm the oil markets. I just wonder, you know, what other levers can be pulled, as it were, if we carry on seeing this kind of up and down spike in prices, which governments are clearly really worried about out.
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Simon Jack
I mean, that's. That when I said, you know, if you take a shot at the asteroid and you miss and then it's still heading towards you, I think we're. It's still in a place everyone has been like Fatty Birol, who's the boss of the iea, said today, this is a major move, but the only solution to this is de escalation of the conflict and the reopening of the Straits of Hormuz. And that still is. That's still pretty much an on, off switch in that regard. In terms of how you deal with this conflict. This goes on for another four or five weeks. Then you know that you'll begin to see, well, you may see oil prices begin to rise again. Let's see how this release goes. But like I say, most people are saying, I mean, you had Rachel Reeves, for example, talking about fuel duty today, saying, we're going to keep that under review. A 5P car brought in in 2022 during the last energy crisis, by the way, that's due to be phased out from September. That's now under review. You've seen people in Austria, for example, telling petrol stations they can only raise prices every other weekday. You've had Germany saying you could only change petrol prices once a day. So you've seen this colle. But all of these, in a way, are at the margins. The real substance of it is how do you reopen a passage of 22 miles wide where 20% of the world's energy goes through?
- [30:05]
James
And we, as some newscasters will remember, and you may like to know, if you didn't hire it, talked about that on yesterday's episode and it's really worth listening to. If you want to know more about the Straits of Hormuz, go back to yesterday's episode. Just coming back here for a minute, what does this mean in terms of. We've talked there a bit about the consumer and what it might mean for the consumer and certainly in terms of prices at the petrol pump, for example, what does this mean for British industry and for the oil industry here? If anything, there's been an argument about what they call the windfall tax, the energy profits levy. The North Sea oil industry detest it. They think it's been outrageous because, they argue, not been windfall profits to be made. I mean. I mean, arguably now there are windfall profits, to me, made. We're exactly at the point where we're told that the Chancellor is considering maybe reducing or, you know, changing or getting rid of reforming.
- [31:01]
Simon Jack
Well, you would know better than anyone with your, you know, with your Scotland hat, your Scotland hat on just how unpopular in some circles the energy profits levy is. Windfall tax by any other name.
- [31:11]
James
Some, but not all. Absolutely right, Certainly, certainly in Aberdeen.
- [31:14]
Simon Jack
And what is, you know, in a sort of really almost amusing bit of timing, they announced last week that there was going to be some movement on reforming the energy profits levy, which, by the way, taxes profits on North Sea oil at a rate of 78%. Now, a lot of oil companies have said this is ridiculous because actually, in the last few months oil prices have been down at 60 and we're not making windfall profits. So it's a rather strange, curious bit of timing to say we're going to reform the windfall tax at exactly the same time as some of the old companies will be making some windfall profits. Because you see, particularly when it went up to $120. What they would say, though, is that we don't mind paying the taxes when it's high, we do mind paying the taxes when it's low. It is, as I say, a curious bit of timing to start talking about getting rid of the windfall tax at a time when oil prices are rising.
- [32:06]
Alex
I mean, it's just so interesting because when you do have something like this, where there is a real sort of shock to energy supplies, what it often does is reignite the very debate about energy supplies in the uk, and we've already seen that, I think, in recent days. So around whether or not it means you should be til, tilting more towards exploiting North Sea oil and gas, whether it means you should be tilting more to ensuring that the supply of renewable energy is more secure. And we've seen some of those political arguments and the other area this is getting a lot of political traction is around fuel duty that you mentioned, Simon. I don't know if you caught Prime
- [32:35]
Simon Jack
Minister's questions and also Rachel Reeves was asked about it earlier in Treasury Select Committee as well.
- [32:40]
Alex
Yeah, yeah. It's become a real sort of focal point of the debate in the uk. So you've got Kemi Badenoch, but also you've had David Nigel Farrell Barrage all suggesting the government needs to move on fuel duty because at the moment it's frozen, obviously, but it's due to go up, as things stand, from September. Keir Starmer making the point that prices haven't gone up, it hasn't increased yet, it's, you know, due to go up in September. We'll keep it under review. I just don't know, sort of what your sense is of. Are the government kind of just hoping things stabilize and that they don't have to take any action that might kind of blow another hole in the public finances with some sort of intervention, whether it's fuel duty or something else, you know, how realistic is your sense of
- [33:18]
Simon Jack
what they're looking for? Well, my guess is once you put it on the table, it's definitely. It's there as an option. And I think it would be, you know, given the fact that oil prices are so high, fuel duty is tacked on to that. Remember that when you have high oil prices, the government makes an awful lot of money in VAT. So because as petrol prices go up, there's 20% VAT on that. So in a way, it might be exchequer neutral to do that at a time, you know, in terms of how much money they're getting, I think having it, it's one of those things that seems impossible to ever change is fuel, gas duty. So I think that having raised the prospect that that is a lever they could pull, it'll be very hard for them to leave that on the table.
- [33:54]
James
Yeah. And just absolute final note, if you're listening to this, as an environmentalist who's concerned about the planet, you're probably thinking, actually there's yet another reason to wean ourselves off oil.
- [34:04]
Simon Jack
But that's probably because you can see the argument in both ways. There's a lot of people that are saying this is just goes to show we should have our own domestic oil and gas supplies. The truth of that is that if you get the oil out of the North Sea, it gets sold into the international market market, it's a tiny drop compared to the world supply. It is not going to change the price of oil or petrol. Slightly different with gas. Most of the gas that comes out of the North Sea is actually used here in the uk. Other people, Ed Miliband included in Ed Miliband especially, maybe, would say this goes back to what I've always said, that we can't rely on hydrocarbons, which come from dictators or hostile volatile areas of the world. That's why we need to do renewables. The problem is the energy system we have at the moment. The electricity price is still often set by the price of gas. That's the sort of leveling out bit which sets the price of the whole market. Until that link is broken, you don't get the full benefit of the sort of cheaper, more consistent and truly domestic renewable energy.
- [35:05]
James
Simon, thank you. Very busy and we packed so much in. Thanks very much.
- [35:09]
Simon Jack
A lot to get through. Yes, thanks, James. Thanks, Alex.
- [35:12]
Alex
And that is all for now. So if you enjoyed this episode and you don't want to miss another, don't forget to press, subscribe on BBC Sounds and we'll be back soon. Goodbye. Newscast, Newscast from the BBC. From one newscaster to another, thank you so much for making it to the end of this episode.
- [35:28]
Chris Mason
You clearly do, in the words of
- [35:30]
Alex
Chris Mason, ooze stamina. Can I also gently encourage you to subscribe to us on BBC Sounds? Tell everyone you know and don't forget, you can email us anytime@newscastbc.co.uk or if you're that way inclined, send us a WhatsApp on +4403301239480.
- [35:54]
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