The expected location for new GB Energy headquarters in Scotland revealed

The new Labour government at Westminster is set to establish the headquarters for its flagship GB Energy in Aberdeen.

Prime Minister Sir Keir Starmer has promised the publicly-owned energy company would be based in Scotland, but has not confirmed the location.

But it has been reported that Aberdeen has been chosen for the investment, amid reports that other locations north of the Border were going to win the race.

Labour has insisted Scotland is central to the UK government's clean energy plans (Photo: Jeff J Mitchell/PA Wire)

A Labour source has told The Scotsman the decision is likely to be made official ahead of the party conference in Liverpool, which takes place at the end of the month.

Aberdeen has long been the favourite destination for the headquarters, given the city being at the centre of the oil and gas industry and the offshore renewables sector.

But doubt had emerged Aberdeen would be chosen after the city’s chamber of commerce laid into Labour’s energy plans ahead of the election, warning the party was putting thousands of energy jobs at risk.

Party figures have been tight-lipped on the location for months, with the only confirmed detail being GB Energy would be based in Scotland.

It has also been reported that as well as Aberdeen being chosen as the headquarters of GB Energy, satellite sites, including in Glasgow and Edinburgh, could be set up, with potential jobs created.

The decision will likely be welcomed by the industry, but the energy trade body Offshore Energy UK (OEUK) has warned Labour’s planned windfall taxes on the sector could cost up to £13 billion.

OEUK said the proposed increase in the energy profits levy (EPL) would see investments in UK projects by oil and gas producers fall from an expected £14.1bn to just £2.3bn between 2025 and 2029.

The report said while expected tax take from the sector would increase in the short term, a rapid fall in production triggered by the loss of investment would result in a £12bn fall in tax receipts.

Under the UK government’s proposed changes, the windfall tax would rise to 38 per cent from November 1, which the OEUK said would push the headline rate on upstream oil and gas activities up to 78 per cent.

The Scottish Government had previously pledged to establish a publicly-owned, non-profit company to sell gas and electricity by 2021, only to scrap the plan years later.

SNP Westminster leader Stephen Flynn said: "Nobody sensible was seriously suggesting that a new energy body should be based outwith Aberdeen, so to have this belated certainty is helpful.  "Now we need to try and understand what this new energy body will actually do, and how it will benefit the people of Scotland given the scale of our resources. In that context, it’s only reasonable to expect any wealth created from Scotland’s resources to flow directly back to our communities. "And, ultimately, it’s important to be clear that this body being in Aberdeen is no mitigation to the damage that is likely to be caused to investment and jobs in our existing energy sector by Labour’s recently implemented tax regime.”

Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said the city would be waiting for confirmation.

He said: “Aberdeen has been Europe’s energy capital for half a century – home to energy companies large and small, a thousand supply chain firms, vast renewables potential off our shores and the highly-skilled workforce who will deliver the UK’s transition to net zero.

“While we await confirmation from the government, and further detail on the functions and focus of a new publicly-owned energy company, we will continue to campaign for a well-managed transition that protects jobs, delivers energy security in the here and now and guarantees a bright future for our energy industry for decades to come.”

Despite the reports, a spokesperson for the Department of Energy Security and Net zero insisted no final decision had been made on the headquarters' location. The spokesperson said: "We do not comment on speculation. Decisions on Great British Energy's location will be announced in due course."