You would imagine that anybody working within the energy industry would have an encyclopaedic knowledge of the various government quangos, investment bodies, departments, regulations, strategies, consultations, and reviews that form the vast soup of acronymic entities that regulate, guide, and invest in our national energy infrastructure. Unfortunately, the sprawling government infrastructure embedded into our energy system is often just as perplexing for those of us working in it as those on the outside.  

Not to be outdone by the previous government’s additions to the acronym soup, the new Labour government has added three new players into this mix. First, we have a new National Wealth Fund (NWF), which according to HM Government (HMG) press release will sit above both the UK Investment Bank (overseen by HM Treasury [HMT]) and the British Business Bank (overseen by Department for Business and Trade [DBT]) and will have £7.3 billion to spend “with the goal of mobilising private capital to fund the UK’s transition to a low carbon economy.”  

This conflicts with Public First’s report that suggest the NWF would be administered by the UK Investment Bank (UKIB), which is noteworthy as we understand Labour figures had taken an interest in the report. Meanwhile, the Green Finance Institute (GFI) correctly identifies an already fragmented investment and its NWF Taskforce report made “a firm recommendation that a new institution is not created” and instead suggested that “the NWF could be established as part of an existing UK entity (either on balance sheet or as a subsidiary)”. There are clearly conflicting understandings – or at least expectations – of where control sits and how the NWF is going to delivers its aims.  

Second, we have seen the establishment of  Mission Control (no doubt soon to be ‘MiCon’), which is a new quango staffed with Labour-appointed external advisers that will coordinate action across government to deliver on Labour’s 2030 decarbonised grid target by being “a one-stop shop, bringing together a top team of industry experts and officials to troubleshoot, negotiate and clear the way for energy projects.” Seemingly ‘MiCon’ (patent pending) will sit within government but above individual departments, albeit accountable to DESNZ, but not to be confused with the Prime Minister’s ‘Make Britain a clean energy superpower’ Mission Delivery Board (MDB) – hope you are keeping up! – which will work to “create jobs, cut bills and boost energy security with zero-carbon electricity by 2030, accelerating to net zero.” Perhaps the structure is clear inside HMG but from the outside it appears new bits of government are being created rather than restructuring the bits that already exist – some might argue that at a time of stretched public finances this is not shrewd.   

Finally, Great British Energy (GBE) will be a new publicly owned energy company that will seek to speed up existing project development, invest in new projects, build up supply chains and support local community projects. No doubt ‘MiCon’ and the Prime Minister’s MDB will ensure GBE and NWF avoid overlapping each other on the investment front and avoid doubling up on work already being delivered within other government bodies. Indeed, this is a challenge that GFI’s report identifies in relation to the NWF – “there is evidence that companies find it challenging to navigate and find relevant sources of finance and support within the current institutional landscape” – and they recommend reviewing “existing public funds that have been established to deliver related outcomes.” 

Despite a large Labour majority in Parliament and much fanfare around what GBE might achieve in years to come, including frequent comparisons with mature publicly owned energy companies around Europe, there seems to be broad opinion that it will take the best part of a year, if not two, to fully-staff and set up the new company.  Either in the process of being established or once it has been set up, GBE will need to assess investment and development opportunities across existing and emerging industries.  

GBE will take several years to become operational and during this time costs for projects will continue to rise, which may whittle down the impact the initial £5bn (minus the £3.3bn funding that will be funnelled through the Local Power Plan) will have once it can be deployed. For example, Vattenfall was intending to spend £10bn on the Norfolk Boreas (1.4 GW capacity) project before prices rose and the project was paused.  

GBE’s founding statement says it will “drive the innovation and investment required to transform our power system and decarbonise the grid by 2030” and the Prime Minister has said GBE will support  “bringing down energy bills for good,” including in the short-term – these are heroically ambitious targets. On grid decarbonisation, regardless of funding, transmission operators may struggle to deliver the upgrades and customer connections required in the timeframes due to supply chain limitations and insufficient skills resource in the UK.  

Optimistically, GBE could accelerate a few projects in the latter years of this decade, but it will take time for this to feed through to reductions in energy bills this parliament due to the lengthy development process from conception to operation.  

With Number 10, HMT, DBT and DESNZ all having a degree of oversight over the new and existing energy-related entities, political tensions will likely emerge, particularly if economic growth is not delivered to plan. Even with modest economic growth, the increasing costs of renewables may become a source of tension between the enthusiasm of Miliband’s DESNZ and frugality of Reeves’s HMT. Perhaps GBE and NWF are seen as ‘levers’, which Tony Blair famously spent time realising were few and far between in government; although Blair’s key insight was that constitutional change and market forces were more effective levers than government spending.  

For now, Labour are all powerful and are using that power to drive forward much-needed planning reform. As someone who believes in the power of liberalised markets to deliver social good, seeing the Labour Party reduce restrictions to development was welcome news. Hopefully, changes to the Nationally Significant Infrastructure Project (NSIP) regime will reduce spurious judicial reviews (JRs) that clog up the NSIP process and have held up several projects for years despite having successfully achieved consent. Charles Banner KC is undertaking a review into the legal challenges of the NSIP consents, which could provide crucial insights that would limit the ability of often small groups in delaying major projects. The present system skews discussions and debates during community consultations toward defending against “in-principle opponents” determined to find any grounds for JR and away from the crucial topics of community benefits, participatory design and economic development opportunities.  

The changes to the NSIP regime need to resolve this conundrum to ensure developers have at least a fighting chance of supporting the government’s 2030 decarbonisation target. Labour should keep in mind that the overwhelming majority of people have never taken part in a campaign to oppose infrastructure (only 9% have been involved in a campaign to oppose infrastructure with 81% having never been involved with one). If the party can stay true to its stated aims to liberalise the planning system, it is entirely possible that a greater number of projects could be delivered, which would give a much-needed boost to Labour’s 2030 decarbonisation target.  

The new 53-MP strong Labour Growth Group suggests there is solid support for these pro-development reforms; however, the shallow majorities of many new Labour MPs, including those in the more rural, former Conservative seats, may start to weigh heavy and backbench support might wane as the volume of constituent emails objecting to new infrastructure increases. 

For now, Labour has backed two horses: planning liberalisation to encourage market forces to correct slow delivery of existing projects; and government spending to boost new projects to achieve its 2030 decarbonisation target. As Blair found during his tenure, market forces are a powerful tool in achieving your aims, whilst more government spending and increased agencies are not always the solution. Perhaps this new generation of Labour ministers will prove the lessons of the last Labour government wrong, or maybe they will learn the same lessons all over again.  

Grayling’s energy and infrastructure specialists have supported clients for over a decade in securing planning consents, managing construction communications and policy reform. To find out how our team can help you, please contact ross.mcwilliams@grayling.com.