Push ahead on ‘most ambitious’ approach to Great British Energy or risk disappointing voters, IPPR urges government

The government must stick to the original ambition of its plans for Great British Energy (GBE) to deliver the step change in the energy market promised before the election, according to a report from IPPR. 

That will mean ensuring the new clean power company has the funding, powers and governance structure to become a fully operating electricity company, both generating power and eventually selling it directly to businesses and communities. 

Only by achieving at least a 5 per cent share of national electricity distribution in the 2030s will GBE succeed in fulfilling the government's aim of lowering energy bills, says the IPPR report – which sets out a detailed blueprint for how GBE should be set up and run. 

The plan for a new, publicly-owned energy company to deliver secure, clean and affordable electricity was among the most popular of the government's pre-election manifesto promises.  

Some 63 per cent of voters said it was a ‘good' or ‘very good' idea, according to polling by More in Common last June. Public support for the idea remains strong: 55 per cent of voters favoured it in polling for More in Common last weekend, versus just 13 per cent saying it was a bad idea. 

But the IPPR report warns that without “bold, but focused” actions the company – due to be formally established this spring - will disappoint expectations by failing to meet its original objectives. 

The report is published against a backdrop of reports – later denied - that the Treasury may be forced to back-pedal on the promise to invest £8.3bn of taxpayer money in GBE over the current parliament. It allocated only £100mn in the Budget to cover the company's first two years of setting up, though it has earmarked a further £3bn to support local and community-owned renewable energy projects. 

IPPR says that with the full £8.3bn originally pledged by 2030, and with the right structures and remit, GBE could feasibly be delivering 5 per cent of the UK's electricity by the early 2030s – the equivalent of 8.5GW of capacity. This would be comparable to equivalent publicly-owned electricity companies in Germany and the US, though still significantly smaller than other such companies elsewhere in Europe. 

At that scale, IPPR argues, GBE would begin to make a tangible difference to the structure and pricing of UK energy markets, similarly to other European publicly-owned clean electricity “champions”. 

The report calls for: 

• GBE to own and operate all its assets. Some have floated suggestions it could instead become a vehicle for public investment in other energy companies, but IPPR says this would duplicate the remit of the new government's planned national wealth fund, while being less effective at delivering innovative energy projects and reshaping the market for public benefit.  

• That means GBE would act as both generator and direct supplier of clean electricity, selling lower-cost power to large industrial projects and communities of households and small businesses via longer-term contracts. 

• GBE's remit should target sustainable rather than maximum profits, with all surpluses reinvested internally. This would help lower prices and enable the company to grow over time. 

• Beyond 2030 GBE should have the power to borrow independently of government, to enable it to invest and expand without weighing on the public sector finances. 

• The long-term aim should be for GBE to become a ‘national champion' for low-cost clean power and energy infrastructure, including projects that might otherwise struggle to attract financial backing.

The report also sets out detailed plans for GBE's governance structure and how the organisation may evolve in the 2030s. 

Simone Gasperin, associate fellow at IPPR, said: 

“Public ownership of electricity is strategically important for modern economic systems and societies. It has the potential to deliver cheaper, cleaner, and more secure energy for the UK, particularly under the current structure of the electricity market.  

“But for Great British Energy to succeed as a publicly-owned operating company, the government must take the most ambitious approach possible, including sticking to its original plan to invest £8.3 billion.  

“It must ensure that GBE can immediately focus on direct investment in fully-owned clean energy projects, delivering real benefits to industrial and domestic consumers, and seeking to establish itself as a major player within the entire UK electricity sector. Our report provides a roadmap to achieve this before 2030 and beyond.” 

Joseph Evans, researcher at IPPR, said: 

“The government is reintroducing public ownership to one of the most privatised electricity systems in the world, at a crucial moment. Transitioning to clean, renewable energy will create a swathe of new jobs around the country and Great British Energy can ensure those jobs are high-quality, with good pay, terms and conditions. 

“This is about ensuring the British state and people benefit directly from the journey to clean electricity – we will all own a share. 

“If GBE's operating and governance structures are set up right, the company could drive the most transformational change to the UK's energy sector in a century, benefiting both consumers and the workforce.” 

Luke Tryl, executive director of More in Common UK, said: 

"GB Energy was one of the most popular manifesto pledges of the 2024 general election, and helped to define Labour's promise of change. 

“The policy struck a chord with voters across the political spectrum because it spoke directly to their priorities and concerns - not just climate change and the environment, but also energy security, independence, and the cost of living. 

“Since the election, the Government has struggled to find public opinion wins, and has risked becoming defined by more unpopular policies. But GB Energy has remained popular; in an era of global instability and high cost of living, it has the potential to hit the sweet spot of providing a proof point for the sort of change the public elected Labour to deliver, along with the greater security people expect in an uncertain world." 

ENDS 

1. Polling by More in Common in June 2024 found 63 per cent of Britons thought that GB Energy was a good idea, including 28 per cent who describe it as a 'very good idea'. This support spanned across politics, with 62 per cent of Reform UK supporters backing the policy. Fieldwork was 1-3 June with a representative sample of 2,055 adults across Great Britain (excluding Northern Ireland). 

2. Polling by More in Common last weekend found 55 per cent thought GBE a good idea, with 13 per cent disagreeing and around one in three voters neutral or undecided. The slight fall in support since June last year broadly reflects the change in sentiment towards the government since the election. Fieldwork was March 14-17, with a representative sample of 2,085 adults across Great Britain (excluding Northern Ireland).