The key pledge of Keir Starmer’s Labour conference speech was the proposed launch of Great British Energy, a publicly owned energy company to invest in clean UK power as part of the party’s commitment to “fight the Tories on economic growth”. But how does it work, and is it the same as renationalising energy?
What did Keir Starmer say about Great British Energy?
In his speech at the Labour conference, Starmer said the party would create a new energy generation company, which would be publicly owned, within the first year of a Labour government.
He said Great British Energy would be “a new company that takes advantage of the opportunities in clean British power … because it’s right for jobs, because it’s right for growth, because it’s right for energy independence from tyrants like Putin. Yes conference, Great British Energy will be publicly owned.”
Starmer added that the “road to net zero is no longer one of stern, austere self-denial – it’s at the heart of modern, 21st century aspiration”.
Why is this necessary?
Currently, many British energy generators are wholly or partly owned by foreign governments or companies. In his speech, Starmer cited “the largest onshore windfarm in Wales”, adding: “Who owns it? Sweden. Energy bills in Swansea are paying for schools and hospitals in Stockholm.
“The Chinese Communist party has a stake in our nuclear industry. And 5 million people in Britain pay their bills to an energy company owned by France.”
Analysis by the Trades Union Congress, seen by the Guardian, suggested British households will each miss out on up to £4,400 over the next two years because the UK does not have a nationalised energy generation company.
The TUC argues that if the UK had a state-backed energy generation company akin to France’s EDF, Germany’s EnBW or Sweden’s Vattenfall, it would receive between £63bn and £122bn in revenues over the next two years.
What would Great British Energy do?
The aim is for the UK to receive the economic benefit from the boom in renewables, according to a Labour spokesperson. The company would have operational independence, but also a mandate to invest in clean energy – wind, solar, tidal, nuclear and other emerging technologies.
The company will be able to invest individually or in partnership with the private sector. The hope is a state-backed company would be able to make riskier investments, including investing in new technology in industries like tidal or in modular reactors. Labour said it would give a boost to industries by “making strategic investment that the companies shy away from”.
How would it be funded?
Under Labour, the government would provide seed capital from the £8bn announced for the National Wealth Fund, but the long-term ambition is for Great British Energy to be profitable, and even generate enough energy to make profits through exports.
But there is a chance further government funding will be needed as the company is likely to take time to turn a profit, especially if its investment is in riskier and emerging industries.
Is Labour nationalising any existing companies?
No. A spokesperson said it was “not about nationalisation, this is a new player into the market”. The new company can invest jointly in ventures with the private sector, or even seek to acquire companies, but that would be done commercially.
Will it be popular?
Research conducted this week for thinktank Common Wealth showed 72% of voters – and also 72% Conservative voters – think it is a good idea to set up a state energy company that is government-owned.
But green campaigners and Labour activists have argued for the full nationalisation of energy companies, which this proposal stops short of. Chris Saltmarsh, national coordinator for the Labour for a Green New Deal campaign group, said: “The party should commit to public ownership of the whole energy system, so we can tackle the cost of living crisis and meet the scale of the climate emergency.”
How will business react?
Although Starmer stopped short of proposing to nationalise existing companies, investors took his speech as a signal to sell off energy stocks.
Drax, the owner of the huge North Yorkshire power station, saw its shares fall 6%, while energy generator SSE dropped nearly 7%. Shares in Centrica, which owns a stake in Britain’s nuclear fleet as well as its British Gas retail arm, also fell by 7%.
