Labour has launched its Great British Energy policy – do we need it?

Published

1 year ago

May 31, 2024

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The establishment of Great British Energy is among the last remnants of the ‘green prosperity plan’ devised and championed by Ed Miliband, the shadow secretary of state for energy security and net zero, three years ago.

The former Labour leader’s vision was to spend £28bn per year in the first five years of an incoming Labour government on decarbonising the UK economy.

However, as the current leader Sir Keir Starmer recognised, the issue was swiftly weaponised by the Conservatives because all the money – as Mr Miliband himself had made clear – would have been borrowed.

More importantly, the plan did not survive contact with Rachel Reeves, the shadow chancellor, who has made fiscal responsibility her priority.

The £28bn-a-year spending pledge was watered down in February this year to one of £23.7bn over the life of the next parliament.

A sizeable chunk of that will be on Great British Energy, described by Mr Miliband as “a new publicly owned clean power company”, which Labour has said will be initially capitalised at £8.3bn.

And, instead of the money being borrowed, Labour is now saying “it will be funded by asking the big oil and gas companies to pay their fair share through a proper windfall tax”.

What’s a windfall tax and what’s it got to do with green energy?

Before going further, it’s worth explaining what the current windfall tax is.

The existing ‘temporary energy profits levy‘ was launched by Rishi Sunak, as chancellor, in May 2022 and imposed an extra 25% tax on the profits earned by companies from the production of oil and gas in the UK and on the UK Continental Shelf in the North Sea.

Due to expire at the end of 2025, it raised £2.6bn during its first year.

Jeremy Hunt, as chancellor, raised the levy to 35% from the beginning of last year and extended its life to the end of March 2028. That ‘sunset clause’ was extended to the end of March 2029 in Mr Hunt’s spring budget earlier this year.

It effectively means that the total tax burden on North Sea oil and gas producers is now 75%.

Labour made clear in February this year that this would rise to 78%. It also plans to remove some of the investment incentives Mr Sunak put in place when it announced the current windfall tax.

That will undoubtedly have consequences.

Offshore Energies UK, the industry body, has said that, in its first year, the existing energy profits levy led to more than 90% of North Sea oil producers cutting spending. It has warned that Labour’s plans could cost 42,000 jobs in the North Sea and some £26bn in economic value.

So the increase in the windfall levy will have consequences for the overall tax take.

It is therefore important for Labour to make clear what changes in investment and hiring it is factoring in from companies operating in the North Sea as a result of higher taxation.

The big operators are already deserting the region. It was reported this week that Shell and Exxon Mobil are close to selling their jointly-controlled UK North Sea gas fields – marking the US giant’s final exit from the North Sea after 60 years.

And Harbour Energy, the biggest independent operator in the North Sea, has slashed investment in the region, along with hundreds of jobs, since the energy profits levy was introduced. It too is seeking to diversify away from the North Sea – having seen the energy profits levy wipe out its entire annual profits during the first year of the impost.

What will Great British Energy even own?

The second big question is what assets will be owned by Great British Energy.

Labour said overnight: “Great British Energy’s early investments will include wind and solar projects in communities up and down the country as well as making Scotland a world-leader in cutting edge technologies such as floating offshore wind, hydrogen, and CCS (carbon capture and storage).”

What is unclear, though, is whether this will involve buying existing assets from private sector operators, building new assets from scratch or co-investing in new projects.

It is worth asking the question because only the latter of these two options will actually add to the UK’s energy generation and storage capacity.

And, if it is to be the second or third options, the question is what return on capital employed Great British Energy will be seeking to achieve.

A risk that money could be wasted

All commercial operators seek to achieve a return on capital which exceeds their cost of capital.

Now, as a sovereign debt issuer with a good credit rating, the UK government enjoys a lower cost of capital than most corporates. But there will still be a nagging concern – given the traditionally poor stewardship of state-owned enterprises in the UK – that, without the discipline imposed by having shareholders, some of the money will be wasted.

Investments of this kind are risky and volatile.

An example of this came last week when SSE, one of the UK’s biggest and best-run renewable energy generating companies, admitted that Dogger Bank A, its giant wind project off the Yorkshire coast, will not be fully operational until next year rather than this year.

Is it needed when billions are being spent on green investments?

A third question is why, precisely, Great British Energy is needed at all.

The UK is already decarbonising more rapidly than any other major economy and is also investing heavily.

The Department for Energy and Net Zero recently estimated that there will be some £100bn worth of private investment put towards the UK’s energy transition by 2030.

National Grid announced only last week that it plans to invest £31bn in the UK on the transition between now and the end of the decade.

SSE is investing £18bn in renewable capacity in the five years to 2026-27. Scottish Power, another of the big renewable energy companies, recently announced plans to invest £12bn between now and 2028.

So it is not entirely obvious why a comparatively small state-owned company is even necessary.

Energy security and cost

Labour’s justification is partly based on energy security – Sir Keir has in the past queried why a Swedish state-owned power company, Vattenfall, should be the biggest investor in onshore wind in Wales – and partly on prices.

It said overnight: “Great British Energy is part of our mission to make Britain a clean energy superpower by 2030 – helping families save £300 per year off their energy bills.”

Again, though, this raises further questions.

Mark McAllister, the chairman of energy regulator Ofgem, told the Financial Times this week that energy bills were unlikely to fall substantially over the decade partly due to the costs of building out the electricity network to support the transition to renewables.

He told the FT: said: “As we build in more and more renewables, we’re also building in the price, amortised over many years, of the networks as well.

“If we look at the forecasts for wholesale prices and then build on top of that the costs of the network going forward, I think we see something in our view that is relatively flat in the medium term.”

And that begs the biggest question of all, not just for Labour, but for all the parties: why is it being left to a regulator, rather than the politicians, to spell out the costs to households of the energy transition?

Business

Economy grew by 0.1% in third quarter, official figures show

Published

10 hours ago

November 13, 2025

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Economy grew by 0.1% in third quarter, official figures show

The UK’s economic slowdown gathered further momentum during the third quarter of the year with growth of just 0.1%, according to an early official estimate that makes horrific reading for the chancellor.

The Office for National Statistics (ONS) reported a surprise contraction for economic output during September of -0.1% – with some of the downwards pressure being applied by the cyber attack disruption to production at Jaguar Land Rover.

The figures for July-September followed on the back of a 0.3% growth performance over the previous three months and the 0.7% expansion achieved between January and March.

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The encouraging start to 2025 was soon followed by the worst of Donald Trump’s trade war salvoes and the implementation of budget measures that placed employers on the hook for £25bn of extra taxes.

Economists have blamed those factors since for pushing up inflation and harming investment and employment.

ONS director of economic statistics, Liz McKeown, said: “Growth slowed further in the third quarter of the year with both services and construction weaker than in the previous period. There was also a further contraction in production.

“Across the quarter as a whole manufacturing drove the weakness in production. There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry.

“Services were the main contributor to growth in the latest quarter, with business rental and leasing, live events and retail performing well, partially offset by falls in R&D [research and development] and hair and beauty salons.”

The weaker than expected figures will add fuel to expectations that the Bank of England can cut interest rates at its December meeting after November’s hold.

The vast majority of financial market participants now expect a reduction to 3.75% from 4% on 18 December.

Data earlier this week showed the UK’s unemployment rate at 5% – up from 4.1% when Labour came to power with a number one priority of growing the economy.

Since then, the government’s handling of the economy has centred on its stewardship of the public finances.

The chancellor was accused by business groups of harming private sector investment and employment through hikes to minimum wage levels and employer national insurance contributions.

The Bank has backed the assertion that hiring and staff retention has been hit as a result of those extra costs.

There is also evidence that rising employment costs have been passed on to consumers and contributed to the UK’s stubbornly high rate of inflation – a figure that is now expected to ease considerably in the coming months.

Rachel Reeves has blamed other factors – such as Brexit and the US trade war – for weighing on the economy and leaving her facing a similar black hole to the one she says she inherited from the Conservatives.

Her second budget is due on 26 November.

She said of the latest economic data: “We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people.

“At my budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.”

Shadow chancellor Sir Mel Stride responded: “Today’s ONS figures show the economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.”

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Resident doctor strikes: I don’t want people to suffer but we have to walk out again, says BMA chief

Published

11 hours ago

November 13, 2025

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Resident doctor strikes: I don't want people to suffer but we have to walk out again, says BMA chief

The British Medical Association (BMA) has defended a new round of resident doctor walkouts starting on Friday, insisting medics’ pay is still “way down” compared with 2008 and that the government has failed to finish “a journey” towards restoring it.

BMA chair Dr Tom Dolphin told Sky News the dispute remains rooted in years of pay erosion that have left resident doctors far behind other public sector workers.

“When we started the dispute, […] the lowest level of the resident doctors were being paid £14 an hour,” he said.

“There were some pay rises over the last couple of years that brought that partly back to the value it should be at, but not all the way.

“The secretary of state (Wes Streeting) himself called it a journey, implying there were further steps to come, but we haven’t seen that.”

When asked if the row ultimately “comes down to money”, he replied: “In the sense that the secretary of state doesn’t want to or isn’t able to fund the pay increases to match the value that we had in 2008.”

Dr Dolphin argued that while “the general worker in the economy as a whole” has seen pay catch up since the 2008 financial crash, “doctors are still way down”.

The government points out that its 29% settlement last year was one of the largest in the public sector and was intended to draw a line under two years of walkouts.

How much do resident doctors earn?

After the most recent pay awards, in 2025/26 a medic just out of university receives a basic salary of £38,831 and has estimated average earnings of £45,900 after factors like extra pay for unsociable hours are taken into account, according to medical think tank the Nuffield Trust.

That average figure rises to £54,400 by the second year and a more senior speciality registrar earns an average of £80,500.

The BMA says that when the dispute started, the most junior doctors were making around £14 per hour. That works out at £29,120 per year for a 40-hour week.

That’s very close to the earnings of a doctor fresh out of medical school in 2022/23 – £29,384, according to Full Fact.

But that’s over a 52-week year without taking into account paid holiday or unsociable hours.

But Dr Dolphin said the deal still fell short: “The gap was biggest for doctors and needed the biggest amount of restoration, and that’s what we got.”

He defended the BMA’s use of the Retail Price Index (RPI), a metric rejected by the Office for National Statistics, saying it “better reflects the costs people face”.

Should resident doctors get a pay rise? Have your say in the poll at the bottom of this story.

‘Who do you think is treating the patients?’

With Chancellor Rachel Reeves preparing her budget amid warnings of deep cuts, Dr Dolphin said the BMA is not demanding an immediate cash injection.

“We’re quite happy for that money to be deferred with some kind of multi-year pay deal so that we can end the dispute and avoid having further industrial action about pay for several years to come,” he said.

“Money spent in the NHS is returned to the economy. For every pound you spend, you get several pounds back.”

When pressed on whether the £1.7bn cost of previous strike action could have been better spent on treatment and technology for NHS cancer patients, he hit back: “Who do you think is treating the cancer patients? It’s the doctors.”

Strikes will cause disruption, union boss admits

Dr Dolphin rejected suggestions that the dispute could destabilise the government, calling the idea “implausible”.

He admitted prolonged strikes have tested public patience, but said the government had left doctors with no choice.

“A prolonged industrial dispute makes people annoyed with both sides,” he said. “It is vexing to us that we are still in this dispute.”

“I don’t want patients to suffer,” he added. “I accept that the strikes cause disruption… of course that’s upsetting for them. I completely get that. And I’m sorry that it’s happening.”

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Anglesey chosen as site for UK’s first small nuclear power station

Published

11 hours ago

November 13, 2025

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Anglesey chosen as site for UK's first small nuclear power station

Wylfa, on Anglesey, also known as Ynys Mon, has been chosen as the site for the UK’s first small modular reactor nuclear power station, the UK government has confirmed.

Officials estimate the site in north Wales will support hundreds of full-time jobs, as well as 3,000 jobs in the local economy at the height of construction.

Work on the site is due to commence in 2026 with an initial programme involving three reactors. The location has the capacity to accommodate as many as eight small modular power stations in the longer term.

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Sky News understands ministers weighed up Oldbury in Gloucestershire as a possible site before ultimately deciding on Anglesey.

The project will be run by the publicly owned company Great British Energy-Nuclear and is supported by a UK government investment of £2.5bn.

Rolls-Royce SMR is set to design the UK’s first small modular nuclear reactors (SMRs), pending final contracts, which are expected to be signed later this year.

Prime Minister Sir Keir Starmer said: “Britain was once a world-leader in nuclear power, but years of neglect and inertia has meant places like Anglesey have been let down and left behind.”

He added: “We’re using all the tools in our armoury – cutting red tape, changing planning laws, and backing growth – to deliver the country’s first SMR in North Wales.”

The site is projected to supply electricity for three million homes – more than twice the number of homes in Wales. It is hoped the Wylfa reactors will start supplying power to the grid from the mid-2030s.

Eluned Morgan, the first minister of Wales, said: “This is the moment Ynys Mon and the whole of Wales has been waiting for.”

She added: “New nuclear is a step into the future, with secure jobs and secure energy guaranteed for the next generation. We have been pressing the case at every opportunity for Wylfa’s incredible benefits as a site, and I warmly welcome this major decision to invest in northwest Wales. Wales is once again leading the way.”

Small modular reactors are compact nuclear power stations, built as prefabricated units for on‑site installation, with the aim of being constructed more quickly than sites like Hinkley Point C.

Nuclear power is not new to the Welsh island. A station was first constructed in the 1960s and began generating electricity in 1971. The two reactors operated for decades before being shut down. Reactor 2 was decommissioned in 2012, followed by Reactor 1 in 2015.

Efforts to revive nuclear generation at the site have also been made before. In 2021, proposals to build a new plant were abandoned under the previous UK government.

Rhun ap Iorwerth, Plaid Cymru leader and MS for Ynys Mon, welcomed the investment, but aired caution over previous false hope.

He said: “Today’s announcement is significant for people on Ynys Mon and across Wales. It reflects years of hard work by both the Plaid Cymru-led Anglesey County Council and Llinos Medi – both as the current MP and former council leader.

“Since I was elected over 12 years ago, the future of the Wylfa site has remained a live issue on Ynys Mon. Whilst we’ve learnt from past experience that we need assurances now that this plan will actually be delivered, there’s no doubt that there’s a real opportunity here that we have to take advantage of.”

He added that his priority is “to ensure that the voices and interests of communities on Ynys Mon are represented at every step”, and that he has “always taken the view that we must make the most of the economic growth and job opportunities for young people that come with a new development at Wylfa”, while mitigating “the challenges” that such projects bring.

“The Welsh government also has a crucial role to play in these discussions. I want to make sure that Welsh government has real input, with Welsh interests placed at the heart of the development,” he concluded.