Labour under pressure over GB Energy 'clarity' after King's Speech as industry raises windfall tax concerns

Labour has been urged to provide “greater clarity” over the launch of a publicly-funded energy company in Scotland, as the “ambition” of plans outlined in the King’s Speech to turn the UK into a “clean energy superpower” were lauded.

Labour used yesterday’s King’s Speech to outline its Bill to set up “Great British Energy” – a company that will own, manage and operate clean power projects across the country – but still did not reveal a location north of the Border for the planned headquarters.

The company will receive funding from the UK government’s new national wealth fund, which Labour says will be central to its mission to deliver growth and a greener economy, as well as the increased windfall tax. There is also a Bill to allow the Crown Estate to borrow money, which aims to boost the rollout of more offshore wind farms.

The Great British Energy Bill provides for the capitalisation of £8.3 billion of new money over the course of this Parliament to accelerate investment in renewable energy such as offshore wind.

The clean energy transition set out in the King’s Speech, which referred to the “urgency of the global climate challenge”, was welcomed by green energy leaders. But some energy companies expressed concerns over the UK government’s plans for taxation, particularly the extended windfall tax.

And Scottish Chambers of Commerce chief executive Dr Liz Cameron said Labour “needs to put more energy into delivering greater clarity around its just transition plan”, as she stressed the government’s key pledge to govern for all of the UK was “meaningless” if tens of thousands of North Sea oil and gas jobs were left at risk.

It comes as Sir Keir Starmer set out plans to tear up planning red tape, reform the economy and restore trust in politics, with a programme containing 39 proposed pieces of legislation.

Measures announced included:

- A Bill to create a new Border Security Command and putting stronger penalties in place for migrant smuggling gangs as part of the effort to curb crossing of the English Channel;

– Plans to end the “outdated and indefensible” presence of hereditary peers in the House of Lords;

– Confirmation of plans to impose VAT on private school fees to fund new teachers in state classrooms;

- A law forcing ministers to consult the budget watchdog on major tax and spending changes designed to avoid a repeat of Liz Truss’s 2022 mini-budget.

But the Prime Minister faces the threat of an immediate mutiny from some of his own MPs over the government’s stance on child benefits and arms sales to Israel.

The Prime Minister faces pushback from his backbenchers for not being more radical in some policy areas, including the controversial cap on child benefits. MPs are planning to table amendments to the King’s Speech on scrapping the two-child benefit limit – something the Prime Minister said he would like to reverse, but cannot yet afford to.

The limit was implemented by the Conservative Government in 2017 and prevents parents from claiming universal credit or child tax credit for a third child. Critics say the policy, which can cut benefits by around £3,000 a year per child, is contributing to rising levels of child poverty.

The SNP has also said it intends to table an amendment calling for the same. Because of its large majority, it is unlikely the government would lose any vote – but a show of defiance from Labour backbenchers would be an early test of Sir Keir’s party leadership in government.

The government has instead pledged to launch a new child poverty taskforce led by work and pensions secretary Liz Kendall and education secretary Bridget Phillipson. The new unit, based in the Cabinet Office, will combine experts and officials and begin the government’s work to address the causes of child poverty and what ministers can do to address it.

But SNP Westminster leader Stephen Flynn branded the taskforce a “cynical attempt to kick the issue into the long grass”. He said: “It’s shameful that Keir Starmer has made the political choice to continue imposing Tory austerity cuts, instead of delivering the change that people in Scotland were promised.”

Labour has meanwhile argued that decarbonising the power system would increase energy security by reducing the UK’s dependence on imported oil and gas, which will also reduce consumers’ exposure to volatile international prices.

But it faced criticism before its sweeping election victory for watering down its original plans to spend £28bn a year on green measures, and experts have warned its bid to achieve 100 per cent clean power by 2030 is a tough ask.

Greg Jackson, founder of Octopus Energy, said: “The government’s clean energy vision laid out in the King’s Speech is ambitious, but can be achieved with rapid action and huge effort. Accompanied by market reform, it could deliver some of Europe’s cheapest power and lower bills for UK households.

“We look forward to working with the new government to ensure the UK becomes a clean energy superpower, creating jobs and growth here and taking a leading role in exporting our expertise and technology.”

Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce (AGCC), welcomed the “detail” in the announcement and called for GB Energy to be based in Aberdeen.

The AGCC ran an advertising van around Westminster during the King’s Speech in a bid to drive home its point on the final HQ location for GB Energy.

Mr Borthwick said: “The scale of the ambition set out today is hugely exciting … encouragingly, the Bill also refers to supporting the further reduction of emissions from our oil and gas sector, rather than seeking to accelerate its decline. This is important, but must now be matched with a fiscal regime which supports continuing investment and production from the North Sea for as long as we need it.”

A Bill to modernise the Crown Estate also aims to speed up investment to help bring forward 20-30 gigawatts of new offshore wind licences by 2030, as part of the plans to drive clean energy.

The Bill will give the Crown Estate the power to borrow from the Exchequer, freeing up its large cash reserves to be invested in new projects to help accelerate the deployment of offshore wind, which needs to as much as quadruple by 2030 to decarbonise the power grid.

But some groups expressed concerns about the cost. Conservative Environment Network director Sam Hall said: “GB Energy risks crowding out private capital, wasting taxpayers’ money and duplicating existing government bodies.

“Market-based solutions – such as competitive auctions, private investment in the grid, and a liberalised planning regime – would get clean energy built at lower cost.”

Offshore Energies UK (OEUK) called on the government to honour its pre-election promises to meet and discuss the way forward so the UK could achieve the homegrown energy transition.

OEUK chief executive David Whitehouse said: “The King’s Speech proposes important legislation for the UK’s economic growth and energy future. During its general election campaign, Labour committed to work with this sector and now they are in government, ministers need to deliver on this promise at the earliest opportunity.”

He added: “It is significant that the independent Office for Budgetary Responsibility will play a major role in projecting and assessing the economic impact of these policies. This same scrutiny must be applied to the impact of any tax and policy changes on our own sector so jobs, energy security and economic value are protected.”