The UK government is reportedly considering slashing the funding for Great British Energy (GB Energy), the state-owned company established by Labour to drive renewable energy initiatives and lower household bills. This decision is expected to be a key part of June’s spending review, raising concerns about the future of Britain’s clean energy ambitions.
Cuts to the £8.3 billion allocated over the five-year parliament would mark another setback for Energy Secretary Ed Miliband, who has already been overruled by the government on other key energy policies.
The latest move comes after Chancellor Rachel Reeves backed the expansion of Heathrow’s third runway, despite Labour’s previous environmental commitments.
GB Energy, a cornerstone of Prime Minister Keir Starmer’s pledge to “supercharge” Britain’s clean energy revolution, was initially granted just £100 million in October’s budget to cover its first two years. However, with a “zero-based review” of all government spending currently underway, ministers are reassessing all financial commitments, including those to renewable energy projects.
According to sources, one proposal under consideration by the Treasury involves cutting £3.3 billion from GB Energy’s budget and redirecting it toward low-interest loans for local authority-led initiatives, such as solar panel installations and shared-ownership wind projects.
Despite Labour’s general election manifesto pledge to maintain the £8.3 billion funding, neither the Treasury nor the Department for Energy Security and Net Zero has confirmed that the full amount will be protected.
A government spokesperson reaffirmed Labour’s commitment, stating, “We are fully committed to GB Energy, which is at the heart of our mission to make Britain a clean energy superpower and to ensure homes are cheaper and cleaner to run.”
While insiders downplayed the likelihood of severe budget cuts, speculation remains that the government may opt to “rebadge” funding from other environmental initiatives, consolidating budgets under the GB Energy umbrella while reducing spending elsewhere.
Political Tensions Over Green Investment
The uncertainty surrounding GB Energy’s funding has reignited speculation about a power struggle within Labour, particularly between No 10, the Treasury, and Miliband’s net zero department.
Prior to Labour’s election victory, Starmer had already halved his party’s green investment plan from £28 billion to under £15 billion, dealing an earlier blow to Miliband’s ambitions.
Insiders suggest the Treasury is scrutinizing all expenditures ahead of the upcoming spring statement, which is expected to reveal that Reeves’s fiscal headroom has been significantly reduced.
One source warned that scaling back GB Energy could harm investor confidence, recalling last autumn’s budget uncertainty that unsettled businesses.
“GB Energy has the potential to be a real confidence booster to business. Scaling it back would damage investor sentiment and, frankly, be electoral madness. It’s hugely popular on the doorstep, especially in Scotland.”
Insiders
Despite its crucial role in Labour’s energy transition plan, GB Energy has encountered several challenges since its launch. Last month, the company admitted that it could take 20 years to fulfill its pledge of employing 1,000 people, with Chair Jürgen Maier declining to specify when energy bills might decrease as a result of the company’s work.
The search for a permanent chief executive has also proved difficult, with industry sources describing the recruitment process for the Aberdeen-based position as “challenging.”
In the interim, the government has appointed Dan McGrail, chief executive of trade body RenewableUK, to lead GB Energy. McGrail, on secondment from RenewableUK, has taken on a six-month contract and will operate from the company’s Aberdeen headquarters, widely known as Europe’s oil and gas capital.
The government has projected that GB Energy will employ 200 to 300 people in Aberdeen over the next five years, but the company remains under the leadership of Maier, who is based in Manchester, alongside a five-member non-executive director team dispersed across the UK.
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