The government’s flagship Great British Energy company could be facing budget cuts as the UK Treasury undergoes a spending review.
According to a report in the Financial Times, government ministers are debating whether the government can afford the full £8.3 billion that has been pledged for the state-owned company over the next five years.
The commitment to £8.3 billion was made as part of the leading party’s general election manifesto, but that the energy company will receive the full amount remains unconfirmed; in the Autumn Budget delivered in October, Great British Energy was allotted an initial £100 million to cover its first two years.
With the £8.3 billion already believed by some to be too small an amount, the full remit of the government’s energy company has never been confirmed—the GB Energy Bill is still undergoing administrative processes. Media reports suggest that the Treasury is considering cutting £3.3 billion that had been earmarked for GB Energy to fund low-interest loans via local authorities for projects such as solar panels on roofs and shared-ownership wind projects.
The rumoured move away from residential rooftop solar continues the trend the government has followed as it looks likely to leave mandated rooftop PV out of the Future Homes Standard and did not pass the ‘Sunshine Bill’ brought forward early this year.
Minister for housing and planning Matthew Pennycook said the government was “extremely sympathetic” to the plan, which would have required that an area the equivalent of at least 40% of a new home’s ground floor area would be covered by a solar system, one of the options debated in the previous government’s 2023 Future Homes and Buildings consultation.
Although GB Energy will own and develop renewable energy projects, it has always been presented as a tool to encourage private investment. However, this approach is thrown into question considering the steps taken by the government that suggest GB Energy will primarily focus on offshore wind generation, given that this is an industry already benefitting from large amounts of private capital.
The government’s financial mechanism to help fund heavy industry decarbonisation has also been reprioritised. Over the weekend, chancellor for the exchequer Rachel Reeves announced that the National Wealth Fund’s remit will be changed to enable it to invest in the defence industry.
A government spokesperson told Current±: “We are fully committed to GB Energy, which is at the heart of our mission to make Britain a clean energy superpower and to ensure homes are cheaper and cleaner to run.”
