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

Interpath-owner to kick off £900m sale of Claire’s administrator

Published

6 hours ago

November 16, 2025

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The restructuring firm drafted in to advise Sir Jim Ratcliffe on a radical cost-cutting programme at Manchester United Football Club will this week be put up for sale with a £900m price tag.

Sky News has learnt that advisers to HIG Europe, the majority shareholder in Interpath Advisory, will on Monday begin circulating information about the business to potential buyers.

City insiders said on Sunday that HIG had received a large volume of inbound enquiries from prospective suitors since it emerged that it was in the process of appointing bankers at Moelis to handle an auction.

Blackstone, Bridgepoint, Onex, PAI Partners and Permira are among the buyout firms expected to show an interest in buying Interpath, according to banking sources.

Interpath was spun out of KPMG UK in 2021 in a deal triggered by the changing regulatory climate in the audit profession.

Growing concerns over conflicts of interest between accountancy giants’ audit and consulting arms had been exacerbated by the collapse of companies such as BHS and Carillion, prompting a number of disposals by ‘big four’ firms.

Interpath has advised on a string of prominent restructuring and cost-saving mandates for clients, including acting as administrator to the UK and Ireland subsidiaries of Claire’s, the accessories retailer which collapsed during the summer.

Sources said that Interpath had doubled its earnings before interest, tax, depreciation and amortisation since HIG Europe acquired the business four-and-a-half years ago.

It is also said to be on track to record a 20% increase in annual revenues in the current financial year.

A sale of Interpath is expected to be agreed during the first quarter of 2026.

HIG declined to comment.

Business

Former chancellor Osborne is shock contender to head HSBC

Published

1 day ago

November 15, 2025

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Former chancellor Osborne is shock contender to head HSBC

George Osborne, the former chancellor, has emerged as a shock contender to become the next chairman of HSBC Holdings, one of the world’s top banking jobs.

Sky News can exclusively reveal that Mr Osborne, who was chancellor from 2010 until 2016, was approached during the summer about becoming the successor to Sir Mark Tucker.

This weekend, City sources said that Mr Osborne was one of three remaining candidates in the frame to take on the chairmanship of the London-headquartered lender.

Naguib Kheraj, the City veteran who was previously finance director of Barclays and deputy chairman of Standard Chartered, is also in contention.

The other candidate is said to be Kevin Sneader, the former McKinsey boss who now works for Goldman Sachs in Asia.

It was unclear this weekend whether other names remained in contention for the job, or whether the board regarded any as the frontrunner at this stage.

Mr Osborne’s inclusion on the shortlist is a major surprise, given his lack of public company chairmanship experience.

With a market capitalisation of almost £190bn, HSBC is the second-largest FTSE-100 company, after drugs giant AstraZeneca.

The bank has been looking for a replacement for Sir Mark for nearly a year, but has run what external critics have labelled a chaotic succession process.

Sir Mark, who has returned to the helm of insurer AIA as its non-executive chairman, stepped down at the end of September, but remains an adviser to the board.

Brendan Nelson, the former KPMG vice-chairman, became interim chair of HSBC last month and will remain in place until a permanent successor is found.

If he got the job, Mr Osborne would be a radical choice for one of Britain’s biggest corporate jobs.

Since stepping down as an MP, he has assumed a varied professional life, becoming editor of the London Evening Standard for three years, a post he left in 2020.

Since then, he has become a partner at Robey Warshaw, the merger advisory firm recently acquired by Evercore, where he remains in place.

If he were to become HSBC chairman, he would be obliged to give up that role.

Mr Osborne also chairs the British Museum, is an adviser to the cryptocurrency exchange Coinbase and is chairman of Lingotto Investment Management, which is controlled by Italy’s billionaire Agnelli business dynasty.

During his chancellorship, Mr Osborne and then prime minister David Cameron fostered closer links with Beijing in a bid to boost trade ties between the two countries.

“Of course, there will be ups and downs in the road ahead, but by sticking together we can make this a golden era for the UK-China relationship for many years to come,” he said in a speech in Shanghai in 2015.

Mr Osborne was also reported to have intervened on HSBC’s behalf as it sought to avoid prosecution in the US in 2012 on money laundering charges.

The much cooler current relationship between the UK – and many of its allies – and China will be the most significant geopolitical context faced by Sir Mark’s successor as HSBC chairman.

While there is little doubt about his intellectual bandwidth for the role, it would be rare for such a plum corporate job to go to someone with such a spartan public company boardroom pedigree.

His lack of direct banking experience would also be expected to come under close scrutiny from regulators.

HSBC’s shares have soared over the last year, rising by more than 50%, despite the headwinds posed by President Donald Trump’s sweeping global tariffs regime.

When he was appointed, Mr Tucker became the first outsider to take the post in the bank’s 152-year history – and which has a big presence on the high street thanks to its acquisition of the Midland Bank in 1992.

He oversaw a rapid change of leadership, appointing bank veteran John Flint to replace Stuart Gulliver as chief executive.

The transition did not work out, however, with Mr Tucker deciding to sack Mr Flint after just 18 months.

He was replaced on an interim basis by Noel Quinn in the summer of 2018, with that change becoming permanent in April 2020.

Mr Quinn spent a further four years in the post before deciding to step down, and in July 2024 he was succeeded by Georges Elhedery, a long-serving executive in HSBC’s markets unit and more recently the bank’s chief financial officer.

The new chief’s first big move in the top job was to unveil a sweeping reorganisation of HSBC that sees it reshaped into eastern markets and western markets businesses.

He also decided to merge its commercial and investment banking operations into a single division.

The restructuring, which Mr Elhedery said would “result in a simpler, more dynamic, and agile organisation” has drawn a mixed reaction from analysts, although it has not interrupted a strong run for the stock.

During Sir Mark’s tenure, HSBC continued to exit non-core markets, selling operations in countries such as Canada and France as it sharpened its focus on its Asian operations.

HSBC has been contacted for comment, while Mr Osborne could not be reached for comment.

In late September, HSBC said in a statement: “The process to select the permanent HSBC Group Chair, led by Ann Godbehere, Senior Independent Director, is ongoing.

“The company will provide further updates on this succession process in due course.”

Business

Direct cost of Jaguar Land Rover cyber attack which impacted UK economic growth revealed

Published

2 days ago

November 14, 2025

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Direct cost of Jaguar Land Rover cyber attack which impacted UK economic growth revealed

The cyber attack on Jaguar Land Rover (JLR), which halted production for nearly six weeks at its sites, cost the company roughly £200m, it has been revealed.

Latest accounts released on Friday showed “cyber-related costs” were £196m, which does not include the fall in sales.

Profits took a nose dive, falling from nearly £400m (£398m) a year ago to a loss of £485m in the three months to the end of September.

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Revenues dropped nearly 25% and the effects may continue as the manufacturing halt could slow sales in the final three months of the year, executives said.

The impact of the shutdown also hit factories across the car-making supply chain.

Slowing the UK economy

The production pause was a large contributor to a contraction in UK economic growth in September, official figures showed.

Had car output not fallen 28.6%, the UK economy would have grown by 0.1% during the month. Instead, it fell by 0.1%.

Reacting to JLR’s impact on the GDP contraction, its chief financial officer, Richard Molyneux, said it was “interesting to hear” and it “goes to reinforce” that JLR is really important in the UK economy.

The company, he said, is the “biggest exporter of goods in the entire country” and the effect on GDP “is a reflection of the success JLR has had in past years”.

Recovery

The company said operations were “pretty much back running as normal” and plants were “at or approaching capacity”.

Production of all luxury vehicles resumed.

Investigations are underway into the attack, with law enforcement in “many jurisdictions” involved, the company said.

When asked about the cause of the hack and the hackers, JLR said it was not in a position to answer questions due to the live investigation.

A run of attacks

The manufacturer was just one of a number of major companies to be seriously impacted by cyber criminals in recent months.

High street retailer Marks and Spencer estimated the cost of its IT outage was roughly £136m. The sum only covers the cost of immediate incident systems response and recovery, as well as specialist legal and professional services support.

The Co-Op and Harrods also suffered service disruption caused by cyber attacks.

Four people were arrested by police investigating the incidents.