Capitalise Great British Energy

Policy baseline

Labour pledged GBP 8.3bn over the Parliament for Great British Energy. The company aims to co-invest rather than directly replace the private sector.

• Targets clean power and local generation.
• Spending is capital not day-to-day service cost.
• Fiscal risk depends on project returns.

Core trade-offs

The direct beneficiaries are clean-energy developers and billpayers if costs fall. The costs fall mainly on taxpayers if project returns disappoint. The main economic question is state investment may not lower bills quickly.

• Clean-energy developers and billpayers if costs fall gain most directly.
• Costs fall mainly on taxpayers if project returns disappoint.
• Key risk: state investment may not lower bills quickly.

Fiscal impact by 2028-29

+GBP 0.8bn to +GBP 4.0bn. Central estimate: +GBP 1.7bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main channel is the scored tax, spending or delivery change.
• Offsets depend on tax receipts, behaviour and pass-through.
• Range reflects uncertain implementation and economic response.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Green construction and supply-chain jobs rise; fossil-linked jobs face transition risk.
• Wages: Skilled retrofit and energy workers may gain; households gain only if bills fall.
• Prices: Upfront costs are high; long-run energy bills may fall if delivery succeeds.
• GDP / productivity: Potentially positive through lower energy imports and innovation; delivery bottlenecks can weaken returns.

Assessment

This is a real trade-off, not a free gain. Clean-energy developers and billpayers if costs fall benefit, while taxpayers if project returns disappoint bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

• Supply-chain limits: Skills, grid connections and materials can delay delivery.
• Cost overruns: Retrofit and energy projects often face uncertain unit costs.
• Weak additionality: Public money can replace private investment rather than add to it.

Safeguards

• Publish project pipelines and unit costs.
• Use competitive procurement where possible.
• Report additional private investment mobilised.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for capitalise great british energy Internal - PolicyLens, 2026
• The Environment and Directed Technical Change Academic article - Acemoglu, Aghion, Bursztyn and Hemous, American Economic Review, 2012
• Great British Energy founding statement UK government statement - Department for Energy Security and Net Zero, 2024
• The Macroeconomic Impact of Europe’s Carbon Taxes Academic working paper - Metcalf and Stock, NBER, 2020
• Economic effects of public investment OBR analysis - Office for Budget Responsibility, 2024
• Change: Labour Party Manifesto 2024 Party policy source - Labour Party, 2024

Other Labour policies

• Raise employer National Insurance
• Apply VAT to private school fees
• Replace non-dom tax status
• Raise capital gains tax rates
• Extend the Energy Profits Levy
• Capitalise the National Wealth Fund
• Expand the Warm Homes Plan
• Move renewables charges to tax