Policy

‘Surprising they took this long to murder it’ | UK’s GB Energy is reportedly facing cuts already

Launching GB Energy was flagship policy of the incoming Labour government, but Prime Minister Keir Starmer is now under pressure to make budget cuts and ramp up defence spending

Cuts to GB Energy would come as a blow to UK energy minister Ed Miliband
Cuts to GB Energy would come as a blow to UK energy minister Ed MilibandPhoto: Lauren Hurley / DESNZ
Journalist

Newly created GB Energy could see its funding cut before it gets to back its first project, with one analyst claiming that the UK Treasury has “always hated” the publicly funded clean power champion.

Launching GB Energy was a flagship policy of the Labour Party when it swept to power in last year’s general election. The publicly owned company was given a mandate to invest strategically in clean energy in the UK, helping speed the country’s journey to net zero.

The incoming government said GB Energy would receive £8.3bn ($10.7bn) over the course of the five-year parliamentary term that began last year.

Only £100m has been disbursed for GB Energy so far and this was funding for the first two years.

Now, the Financial Times has reported that ministers are considering whether they can afford to give GB Energy all £8.3bn, citing people familiar with the discussions.

The UK government, along with other European powers, has come under pressure to ramp up defence spending due to the war in Ukraine and President Donald Trump’s move to pull back US support for Kyiv.

UK Prime Minister Keir Starmer announced major cuts to the UK’s foreign aid budget last month, saying this was help boost defence spending. The UK press has since been briefed to expect more spending cuts in the government's Spring Budget.

One option the Treasury is reportedly mulling is cutting £3.3bn that was earmarked for GB Energy is fund low-interest loans through local authorities for projects such as solar panels on roofs and shared-ownership wind projects, according to the Financial Times.
Cuts to GB Energy will be seen as a blow to energy minister Ed Miliband, as well as the clean power company’s new interim CEO Dan McGrail, who currently heads trade association RenewableUK.

“The Treasury has always hated Great British Energy,” wrote Adam Bell, director of policy at consultancy Stonehaven and a former energy strategy chief for the government, in a post on LinkedIn.

“The contention of the Treasury is that policy should only ever be additional to something the private sector would otherwise deliver, which explicitly rules out the kind of nakedly political project of changing ownership structures in the energy sector.”

“That they took this long to try to murder it is the only surprising thing.”

The exact role GB Energy will play in the UK’s clean power sector has not been fully defined. It has however entered a plan to work with the UK’s seabed landlord The Crown Estate to carry out early work on offshore wind projects to de-risk them and speed their development.

Legislation to formally create the entity GB Energy has been making its way through the House of Commons as the Great British Energy Bill.

Juergen Maier, former chief of Siemens UK, was appointed as its chair last year, while five new non-executive directors joined in January.

UPDATE: In a statement issued to Recharge after publication of the article, a spokesperson for the Treasury issued the following statement: “We are fully committed to the £8.3 billion for GB Energy, which is at the heart of our mission to make Britain a clean energy superpower and to ensure our homes are cheaper and cleaner to run."
“And we are making rapid progress; making Juergen Maier the start-up chair, confirming Aberdeen as HQ, progressing the Great British Energy Bill, and creating an unprecedented partnership with The Crown Estate which has the potential to leverage up to £60 billion of private investment into the UK’s drive for energy independence”.
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Published 7 March 2025, 12:04Updated 7 March 2025, 17:34
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