What is Great British Energy? The solution to energy dependency? 

In times of economic and political uncertainty, security is paramount. Yet, it is only in recent years that “energy security” has truly entered the public debate. The catalyst? Russia’s invasion of Ukraine in 2022, which sent energy prices soaring and left households and businesses struggling. Now, more than ever, the UK’s reliance on foreign energy sources has come under scrutiny. 

Reducing this dependency seems logical. While full energy self-sufficiency may be unrealistic, reducing reliance on states that pose political threats is essential. So, when the Labour Party, then in opposition, proposed “GB Energy,” it sparked significant interest. The idea of a British-owned energy company appeals to a wide section of society. The patriotism evoked by the name, combined with the promise of public ownership struck a chord with many. But what exactly is Great British Energy, and can it deliver on its promises? 

The UK’s history with state-owned industries is mixed, and doubts persist about the government’s willingness to hold all investments within the company exclusively. 

The concept was introduced as part of the now largely abandoned “Green Prosperity Plan.” Much of this ambitious plan was dropped to shore up the economic credibility of Shadow Chancellor Rachel Reeves. The proposal for a new state-backed energy company, championed by Ed Miliband, then Shadow Energy Secretary, was initially part of a £28 billion annual spending pledge. However, this was later scaled back to just under £24 billion over five years, raising doubts about the government’s commitment to the project. 

Miliband proposed that GB Energy would be funded by a windfall tax on fossil fuel company profits, avoiding heavy borrowing. But whether this tax will cover the estimated £8.3 billion needed to launch the company remains uncertain. Many expect that additional borrowing or further tax increases might be necessary to finance this venture. 

A critical question remains: what will GB Energy actually own? So far, details are scarce, with only vague commitments to invest in “wind and solar across the country.” It is unclear whether the government will purchase existing private ventures or establish new ones from scratch. The UK’s history with state-owned industries is mixed, and doubts persist about the government’s willingness to hold all investments within the company exclusively. 

On the surface, GB Energy appears to be a logical step towards securing the UK’s energy future, especially given the need to transition away from fossil fuels.

If the government opts for public-private partnerships (PPPs) in energy production, it could lead to the rapid development of new projects, such as solar and wind farms. In the short term, this approach could help the UK meet its renewable energy targets and reduce reliance on imports. However, PPPs carry long-term risks. Private companies may demand inflated returns, as seen in other sectors like the NHS, where hospital trusts are still repaying companies that built their facilities decades ago. 

On the surface, GB Energy appears to be a logical step towards securing the UK’s energy future, especially given the need to transition away from fossil fuels. However, beneath the surface, questions of viability and political will emerge. The government faces two major challenges in this area. First, consumers are likely to face price increases in the short to medium term, unless significant borrowing is secured to fund these new energy sites. This could prove unpopular, particularly in a cost-of-living crisis. 

Secondly, if Labour is serious about achieving economic stability, it must confront the political risks associated with short-term tax rises and spending cuts. Will the party be willing to compromise its commitment to fiscal prudence to pave the way for long-term energy security? This is a critical question, as Labour’s economic credibility is likely to be a key issue in any forthcoming general election. 

Upwards of two thirds of the public supports the creation of GB Energy.

Despite these challenges, recent polling by YouGov for the Energy and Climate Intelligence Unit found that upwards of two thirds of the public supports the creation of GB Energy. Given this level of public backing, one would think that Keir Starmer and his team should push forward with this policy rather than diluting or abandoning it, as has happened with other Labour promises in its original green investment plan. 

If managed well, Great British Energy could not only enhance the UK’s energy security but also mark a significant shift towards public ownership and investment in critical infrastructure. However, its success will depend on the government’s ability to balance long-term goals with short-term political and economic realities. As energy prices continue to dominate headlines, the stakes for getting this right have never been higher.