Ministers are considering cutting the budget of Labour’s flagship state-owned energy company GB Energy.
GB Energy was originally promised a budget of £8.3 billion over the current five-year duration of parliament. However, October’s budget only included £100 million for the company’s first two years.
A Financial Times report warned that the upcoming June spending review will likely see cuts to the budget.
The move comes amid mounting pressure on the UK government as it looks to push defence spending against the backdrop of the Russian invasion of Ukraine and a weakening US commitment to NATO.
This means that every part of the budget could be subject to a “zero-based review”, with sources warning that every previous spending commitment could be under review.
According to people familiar with the discussions, the Treasury could cut £3.3bn from its budget, including the portion previously earmarked for low-interest loans to cover projects such as rooftop solar and shared-ownership wind projects.
A government spokesperson said: “We are fully committed to GB Energy, which is at the heart of our mission to make Britain a clean energy superpower and to ensure homes are cheaper and cleaner to run.”
However, neither the Treasury nor the Department for Energy Security and Net Zero (DESNZ) have confirmed that GB Energy is still guaranteed the full £8.3bn of funding.
While the exact remit of the company is still unknown, GB Energy was created to help accelerate the UK’s energy transition, most likely by taking stakes in projects such as offshore wind farms.
However, the group’s chairman, Jurgen Maier, has previously said his long-term plan for the company is to create a UK Orsted.
Maier’s claims that GB Energy could create 1,000 jobs have also been revised, with Maier clarifying that that figure would be over 20 years, with the next five years set to bring 200-300 jobs to Aberdeen.
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