What Happened To GB Energy?

Craig Dalzell

One of Common Weal’s most important policy successes has been how we’ve pushed the debate in Scotland and beyond on the issue of publicly owned energy. Energy is absolutely vital to our entire economy regardless of which side of the left-right spectrum you believe that economy should serve (as Prof Steve Keen puts it: “Capital without energy is a sculpture; Labour without energy is a corpse.”) and in the UK we, unlike many other states, have decided to sell off our energy sector to the point that more of our energy is owned by the public sectors of other nations than is owned by our own, never mind the vast swathes owned by private multinationals that are the size of countries.

We’ve been campaigning for a reversal to that trend for our entire existence (see, for example, our blueprint for a Scottish National Energy Company here and a brief history of our campaign here) and while we haven’t yet achieved our goals, the impact we’ve had has been tangible. We’ve seen three political parties in Scotland (the SNP, Labour and the Greens) pass motions at conference calling for public ownership of energy and all three have seen their Parliamentary representatives put forward motions or calls to that effect. Granted, those parties with the power to enact those policies subsequently failed to do so despite being put in increasingly uncomfortable positions of running out of excuses to hide behind (see my presentation here on how we’ve given the Scottish Government several options for bringing energy into public ownership without breaching the limits of devolution that they claim prevent them from doing so). Nevertheless, where the Scottish Government backed away, others stepped up. Our plan in Powering Our Ambition was adopted by the Welsh Government during the Labour-Plaid cooperation government (it’s unknown whether the breakup of that agreement and the crisis facing the new Welsh FM has affected those plans) and UK Labour decided to respond to the Scottish Government’s failure by announcing GB Energy with a fanfare slogan of “a publicly-owned energy company headquartered in Scotland”.

Unfortunately, very little else was said about the plans until very recently. We had no idea of the scope or scale of the company, how quickly it would ramp up, or what percentage of the UK’s total energy sector it would actually own. That is until the General Election was called the other week and Labour had to scramble to develop talking points.

We now know that GB Energy won’t be an energy company per se. It won’t employ engineers and technicians to build, operate and repair energy assets. Instead, it is to be an “investment vehicle” that buys equity stakes in otherwise privately owned operations. This isn’t in and of itself a terrible idea when set against the alternative of funding private energy companies via grants, subsidies and bailouts without providing a return on that investment to the public purse (and we’ve directly advocated that the Scottish Government ends its own policies of subsidies in favour of equity stakes instead) but this is a very far cry from the “Vattenfall model” that Starmer previously promoted (Swedish public energy company Vattenfall won a nearly 800MW stake in the ScotWind project – they will directly own and operate those assets once built).

The lack of ownership of skills is what will prevent GB Energy from being truly transformative. Simply being a fund that pump-primes investment means that the UK will still be reliant on foreign companies to build up and out as we move through the coming energy transition. There will be no possibility of doing what companies like Sweden actually did and use initial cooperation with companies to prime the skills within companies like Vattenfall so that they could eventually take on projects in their own right without having to be a junior partner and co-investor without much actual influence in how those projects would develop. That is what will allow the UK to then strategically develop the energy sector according to need (see the section of our public energy paper on how a Scottish Energy Development Agency would develop that strategic plan).

The last problem I’ll mention here is one of scale. GB Energy has been promised £8.3 billion over its first five years. This is simply nowhere near enough if we want the UK to actually start shifting the energy sector back into public ownership. Under Jeremy Corbyn, Labour estimated that full nationalisation of energy could more like £130 billion (and more like £200 billion at today’s prices though the true cost would have likely been a lot less if done in the right way). We have no idea where GB Energy will invest its money (£8.3 billion could buy the equivalent of a 10% stake in the ScotWind project, worth 2.8GW of renewable energy capacity or an 18%, 530MW stake in Hinkley Point C nuclear plant) but if we assume that Scotland receives a “population share” of that investment then that works out at less than £140 million per year – less than the £200 million per year that the Scottish National Investment Bank is currently being funded by the Scottish Government.

But, of course, Keir Starmer’s slogan for this election is “This Changed Labour Party”, by which he means he has stripped out anything that could remotely look a bit Left unless it can be used as a weapon against the Conservatives and/or the SNP. A defunded GB Energy “investment vehicle” hits the sweet spot of the “Minimum Promised Deliverable” for this purpose. Enough public ownership to say they’ve done it (which puts them ahead of the SNP) but not enough to actually disrupt the energy market (which avoids the Conservatives or Labour’s friends in the financial sector accusing them of being socialists).

Scottish Labour should be appalled that their strong public energy campaign in Scotland has been subverted and neutralised in this way and the SNP have been right to call UK Labour out on their climb down but the SNP themselves have their own woeful track record on this – including ignoring the votes of their own members at three separate conferences where they’ve called for public energy – so I’d have more time for those complaints if the SNP planned to actually do something to raise the bar and outbid that minimum promise. As of the time of writing, none of the parties have yet published their full election manifestos (I’ll be linking to all of them over on my personal blog here if you want to keep track of them) so my call to action for the Scottish parties across the Left is to use this moment, listen to those who have been pushing you for years now. Take the issue of public energy seriously, and give us a serious plan to finally bring energy back into public hands.

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