The government’s comprehensive spending review has seen a 16% increase in departmental spending on the Department for Energy Security and Net Zero (DESNZ) but diverted £2.5 billion of Great British Energy funding to nuclear power.
The Spending Review 2025 (SR25) confirmed the total capitalisation to be received by the state-owned energy company GB Energy by 2030 will be £8.3 billion, despite rumours this would be reduced. However this total is given as a shared amount for Great British Energy and Great British Energy – Nuclear, with the latter to receive £2.5 billion, from the funding allocated to both bodies, to small modular reactors (SMRs).
According to the government, SR25 “capitalises on the growth opportunities of accelerating to net zero by supporting key decarbonisation sectors, delivering jobs and local growth”.
The review document, which shows that DESNZ will see a 16% increase in overall departmental spending, reaching £12.6 billion by the 2028-29 period, says the increase in public money is needed to mobilise private investment. This has been consistent messaging around the funding for GB Energy, which is intended to act as a catalyst for private financing for renewable generation in the UK.
The government also confirmed today (13 June) that £500 million in new funding will be allocated to hydrogen infrastructure, including the UK’s first regional hydrogen transport and storage network, connecting hydrogen producers with vital end users, including power stations and industry.
The commitment made in SR25 to funding the Warm Homes Plan with £13.2 billion spending between 2025-26 and 2029-30 has been well received, as has the more general capital boost for the clean energy sector.
Caroline Bragg, chief executive of ADE, a trade body for the heat network and demand side energy sectors, called the Warm Homes funding “a tectonic shift”.
Minesh Shah, managing director of the Renewables Infrastructure Group, a British investment trust focused on renewable electricity generation assets, said: “The government has, thankfully, reaffirmed its energy security and clean energy ambitions. Its ongoing commitment is vital to securing investor confidence and attracting new sources of capital into the UK’s economic recovery.”
Great British Nuclear Energy
A major sticking point in the government’s spending plans has been the way that GB Energy is monetised. Earlier this year, the government had to speak out to counter claims that the manifesto pledge of £8.3 billion would not be met.
A further £80 million over the period covered by SR25 (financial years 2025-2026 to 2029-2030 for capital investment, and 2025-2026 to 2028-2029 for revenue spending) has been confirmed for port investment that would support floating offshore wind deployment in Port Talbot.
SR25 also sets out a boost in funding for the Sizewell C nuclear plant, which is allocated £14.2 billion, as well as £2.5 billion to enable one of Europe’s first SMR programmes, with Rolls‑Royce SMR selected as preferred bidder to partner with Great British Energy – Nuclear.
Great British Energy – Nuclear is the new name given to Great British Nuclear, established by Boris Johnson’s government.
Referring to GB Energy and its new nuclear companion, the Treasury’s spending plans said the “two allied publicly owned companies with a shared mission” would spend the £8.3 billion on “homegrown clean power” including £2.5 billion to help the UK develop a new generation of small modular nuclear reactors.
When Great British Energy launched, a commitment was made to collaborate with Great British Nuclear, but despite this and the renaming of the government’s nuclear energy company, the two remain separate entities.
This is why the allocation of £2.5 billion to SMRs, via Great British Energy – Nuclear, being taken from the total allocated to GB Energy, is such a surprise. So far, GB Energy has pledged £400 million to rooftop solar for the public sector and £300 million to offshore wind; such a large proportion allocated to an area not included in GB Energy’s headline focus has raised eyebrows.
Spending review and transport decarbonisation
Another key area for decarbonisation in the spending review is transport. The government will increase transport capital, providing £15.6 billion in total by 2031-32 for the elected mayors of some of England’s largest city regions via the Transport for City Regions (TCR) settlements to support, amongst other “local transport priorities”, “zero emission buses, trams and local rail”.
A more explicit £2.6 billion investment will go to decarbonise transport, including £1.4 billion to support the continued uptake of electric vehicles, including vans and HGVs, and £400 million to support the rollout of charging infrastructure. A further £616 million will go toward walking and cycling infrastructure, with the rest allocated to so-called ‘sustainable’ aviation fuels.
CEO of Aegis Energy, an EV charging hub provider, Michael Shaw, said it is “especially encouraging” to see the £400 million ringfenced for charging infrastructure. He said the investment must be focused on delivering a public charging network that is reliable, accessible, and fit for commercial vehicle use.
As charging network operator Osprey pointed out, the chancellor of the exchequer Rachel Reeves said that the “zero-base review” means all spending had to be re-justified and there is no obligation to honour funding commitments made by the previous government.
As such, the absence of the Rapid Charging Fund (RCF) in SR25 means it has been scrapped, with the capital allocated to it, which has been untouched since it launched in 2020, likely redistributed as part of the £400 million for infrastructure.
Osprey said in a LinkedIn post that it looks forward to “emphasising the need for support to deliver otherwise unviable grid connections on critical UK A-Road sites and underserved areas”.
