Treasury officials are weighing up plans to cut funding for GB Energy in June’s spending review, threatening a major setback to Energy Secretary Ed Miliband’s clean energy vision, new reports say.
The Government could reduce the £8.3bn promised to the state-owned company over the current parliament.
One potential cut targets the £3.3bn previously earmarked for GB Energy to fund low-interest loans via local authorities.
These loans were intended to support projects such as solar panels on roofs and shared-ownership wind initiatives.
The decision comes as Sir Keir Starmer’s Government shifts priorities toward defence spending amid tensions between Ukraine and the United States.
Ministers are conducting a “zero-based review” of all Government spending to refocus priorities. This represents the first comprehensive assessment of Government spending in 17 years, according to Darren Jones, Britain’s deputy finance minister.
Ministers are conducting a “zero-based review” of all Government spending to refocus priorities
PA
GB Energy was only allocated an initial £100m in October’s Autumn Budget, despite Labour’s manifesto pledge of £8.3bn over the five-year parliament.
This funding was meant to support the company’s mission to decarbonise the electricity grid by investing in and operating clean power projects. The state-owned firm is a central component of Starmer’s plans to “supercharge” Britain’s clean energy revolution.
Neither the Treasury nor the Department for Energy Security and Net Zero has confirmed that the full £8.3bn funding is still guaranteed.
A Government spokesperson reaffirmed their commitment to GB Energy, stating: “We are fully committed to GB Energy, which is central to our mission to make Britain a clean energy superpower and help households cut costs with cheaper, cleaner energy.”
However, GB Energy recently admitted that it could take up to 20 years to fulfill its pledge to employ 1,000 people. Chair Jürgen Maier also declined to specify when the company would deliver lower energy bills.
A Government spokesperson reaffirmed their commitment to GB Energy
PA
Industry insiders have aslo described GB Energy’s efforts to recruit a chief executive for its Aberdeen headquarters—a city widely considered the oil and gas capital of Europe—as a “challenging” task.
One Government official told the Financial Times that the stock response “HMT refuses to confirm X” could now be “applied to every single spending commitment” because of the ongoing spending review. Implying that all funding decisions are under review and subject to potential cuts or changes.
Financial support will only be provided to departments that meet requirements set out in the review, the Financial Times reported.
The potential cuts to GB Energy funding reflect mounting pressure on Government finances as priorities shift. One campaigner expressed “really strong concern among relevant stakeholders” that the Warm Homes programme, which funds insulation and household energy efficiency improvements, could also face significant cuts.
The Department for Energy Security and Net Zero
Getty
The £13.2bn pledged for energy efficiency schemes could also be at risk of cuts, raising concerns about Britain’s clean energy goals.
The UK aims to decarbonise its power sector by 2030, reducing reliance on gas-fired power plants while expanding renewable energy capacity.
GB Energy was expected to work with the Crown Estate to develop 20-30 gigawatts of offshore wind by 2030, but its role in the UK’s low-carbon plans remains unclear, as private sector investment already drives offshore wind expansion.
GB Energy is currently facing leadership and staffing challenges as it establishes operations.
Last month, the Government appointed Dan McGrail, chief executive of trade body RenewableUK, as interim chief executive on a six-month contract.