Great British Energy has been called everything from a state owned corporation to an investment vehicle, but what is GB Energy really and what effect will it have on the UK? Today the government gave their most comprehensive look at GB Energy so far in anticipation of its introduction to parliament later today.
What will Great British Energy do?
Labour have described GB Energy as a “publicly-owned clean energy company”, one which will be “owned by the British people” with the goal to “deliver power back to the British people”.
Some to the Government’s left have criticised this characterisation, with the Scottish Greens calling it an “investment vehicle, not an energy company”.
Despite last year’s party conference voting in favour of nationalising the UK’s energy, ministers immediately rejected the proposal. The Government have been clear that GB Energy will not bring the energy sector under public ownership.
Under Labour’s plan, GB Energy will use government funds to invest in private energy production, improving energy production whilst expanding the government’s assets. The Prime Minister argued today that GB Energy would “bring a better return for the taxpayer”, through a combination of lowering high energy prices, whilst using energy profits to reduce the Uk’s tax burden.
The fiscal effect is particularly important given Labour’s claim of a ‘dire’ fiscal situation.
Today, Starmer did not repeat his election claim energy bills would fall by £300 as a result of GB Energy, however, he did maintain that bills would eventually fall. Regarding its fiscal effect, Energy Secretary Ed Miliband today acknowledged that it would not make a profit immediately, but that by the end of the parliament GB Energy would supplement government funds.
A Green Energy Revolution
In addition to bringing down tax and energy bill costs for the general population, Starmer has sold GB Energy as the first step in a ‘Green Energy Revolution’. GB Energy’s 8.3 billion pounds of investment will be directed primarily to renewable energy.
Labour have pledged that GB energy will leverage £60 billion in private investment. Today’s announcement of a partnership with the crown estates will give GB Energy access to £16 billion in land assets.
The Crown Estates are formally owned by the monarch but have been effectively managed by Parliament since the eighteenth century. The fact that crown estates are often water fronts will especially help the government in it’s plan to increase energy production.
Particularly central to GB Energy’s plan is the exploitation of various energy sources in the North Sea, particularly hydrogen electrolysis and offshore wind production.
What Does This Mean for Oil and Gas Workers?
Perhaps the strongest opposition to GB Energy has come from a constituency historically supportive of nationalisation, that being trade unions.
Figures from a number of leading British trade unions have expressed concern regarding Labour’s energy policy, with unions from Unite to the TUC warning against “a repeat of what happened to coal workers in the 80s”.
When questioned about the future of jobs in the north sea, Starmer was eager to reject parallels to Thatcher’s policy on coal miners, and instead frame GB Energy as a way of preventing a repeat of the generational depravation that the collapse of the industry caused.
“We had a transition away from coal. The government of the time did not do the forward planning for the next generation of jobs. “
“With communities across the country still feeling the effects of that, I’m never going to let that happen under a Labour government.”
Starmer’s argument that the decline of oil jobs is inevitable is increasingly accepted by unions. Generally, unions now advocate a ‘just transition’, in which new jobs are created in the North Sea.
Starmer has highlighted that green energy production will be in the region of oil jobs, claiming today that “Scotland will lead the Green Energy Revolution”.
With a Green transition inevitable, Starmer is presenting GB Energy’s prioritisation of clean energy not as a threat to oil jobs, but the only way of saving them.
What does this mean for UK energy policy more broadly?
In today’s announcement, Ed Miliband referred to GB Energy as a “National Champion”, a term borrowed from pre-Thatcher industrial policy. From 1945-1979, the UK government encouraged the consolidation of industries into large monopolistic firms with state support. It was believed that these national champions would be able to better utilise economies of scale and large capital reserves to invest in larger projects.
Thatcher’s government encouraged foreign investment in national champions and privatised those own by the government. Starmer appeared to directly criticise Thatcher’s privatisation of North Sea today, stating that the goal of GB Energy would be “maximising our assets rather than flogging them off” with the result of bringing “a better return for the tax payer”.
By drawing an allusion to the era of National Champions, a term that was also used in GB Energy’s initial announcement, Labour is signalling a re-alignment with the post-war consensus on industrial policy.
Starmer clarified that GB Energy “will work with the market” in its aims. He emphasised that Labour’s energy policy “will be pro-business, pro-worker and pro-wealth creation”. Rather than expanding state control, the government’s policy seems to be a continuation of their proposed renewal of ‘industrial strategy’, something discussed in our interview with Eman Martin-Vignerte from Bosch.
Final Thought
Today’s announcement has been a general success for Labour. Today several environmentalists announced their support for the plan, with polling showing consistent support for the policy.
If successful, this policy will enable Labour to meet its climate targets whilst ensuring well paid high skilled jobs in the North Seas and elsewhere.
More than energy, however, GB Energy highlights Labour’s economic policy. Labour is less willing to adopt the pre-thatcher programme of nationalisation, however, the Government is receptive to the era’s concept of industrial strategy and national champions.
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This article was written by Chamber UK’s features writer – Alex Connor.