Don’t rush establishment of GB Energy, Labour urged

Labour has been warned against rushing the formation of GB Energy at the expense of more pressing issues.

Consultancy Madano urges Labour to avoid wasting political capital and Parliamentary time by rushing the establishment of GB Energy, if it wins next month’s election.

The Labour manifesto, launched earlier this month, placed the public-owned GB Energy at the heart of the party’s energy plans for the next Parliament.

As widely trailed beforehand, the manifesto confirms that the new company is designed to co-invest in renewable projects, provide financial backing for commercially unproven technologies and support grassroots low carbon schemes.

In its ‘Orange Paper’, published on Thursday (20 June) a fortnight ahead of 4 July’s general election, Madano urges Labour to get GB Energy right by consulting on its plans after it enters government.

It says: “This is tricky because Labour has talked about little else in the energy space and described Great British Energy as ‘a first step for change’, so this course of action would raise some eyebrows.”

Nevertheless the document says that pausing GB Energy’s establishment is “the right thing to do”.

Any such change to the machinery of government will take at least several months to implement and establishing a fully operational new body could last more than two years, given legislative requirements.

However, if Labour gets it wrong early, it will be “hard to deliver Great British Energy at all, or at least, effectively” says the report by Madano, which supported shadow chief secretary to the Treasury, Darren Jones’ Major Capital Projects Review.

Giving an example from history, the report says the establishment of the NHS in 1948, three years into its term was a success because the post-war Labour government took “time to get it right”.

It also says that introducing improvements to the grid and the planning system in the meantime will provide a “foundation upon which Great British Energy can build further success”.

The paper calls on a potential incoming Labour government to consult on the strategic remit of GB Energy and identify  the new body’s potential leadership.

And it says the strategic remit of the National Energy System Operator (NESO) and GB Energy must be clarified, including how absorbing any of the former’s functions into the new body will be achieved and managed.

The paper also recommends:

• Accepting the National Infrastructure Commission’s recommendation to establish “immediately” a central coordination and oversight mechanism reporting to the Prime Minister
• Immediately instructing the NESO to produce a Centralised Strategic Network Plan by the end of 2025
• Mandating the NESO to produce a Strategic Spatial Energy Plan by the end of 2025 to provide an authoritative evidence base for key clean energy projects
• Making a single Cabinet-level minister, such as the energy secretary, responsible for final funding recommendations through a new cross-departmental body or committee with sign-off on all major projects in the first three months of the new government by the Prime Minister
• Creating a new cross-departmental body, bringing together the Treasury’s Office for Investment, the department for Energy Security and Net Zero, Department for Business and Trade, to ensure “effective joined-up” decision making on major infrastructure and other projects
• Continuing to back the Hydrogen Production Business Model and provide funding certainty to future hydrogen allocation rounds