Andy Burnham has announced a publicly owned company to invest in Britain’s electricity grid, using his first party conference speech as Labour leader today to launch Great British Grid.
The prime minister told party activists in Liverpool that the new body would speed up connections to the grid by driving up competition for connection projects.
The proposals sit at the centre of a new goal to bring UK energy costs in line with other European nations within 10 years. GB Grid is billed as the first significant step towards greater public control of utilities, the centrepiece of Burnham’s pitch for power over the summer.
How the body would work
Full details are yet to be set out. Labour said the company would invest in and compete for transmission connection projects alongside the three private companies that currently own and manage the grid in Britain.
The party also said it would make it easier for firms waiting to be connected to finance connection infrastructure themselves, with GB Grid supporting and potentially co-investing in projects alongside them.
Labour said funding would come from within the existing budget of GB Energy, the Aberdeen-based public green investment company, which was launched with an £8.3bn budget.
In extracts released ahead of the speech, Burnham said GB Grid would “work with the private sector and network companies” to “reform a broken energy market”. He added: “It will increase competition to drive down costs and speed up delivery so businesses can connect faster and grow quicker.”
Energy regulator Ofgem has estimated that £70bn of investment is required in the grid between 2025 and 2031, quadrupling the current rate. National Grid set out its own £70bn five-year investment plan across the UK and US in May.
In a report published on 11 September, the National Audit Office warned that the number of projects waiting to connect to the grid had grown “significantly”, while delays to projects were also increasing. Business Matters has previously reported on grid connection waits holding back data centre investment.
Stephen Phipson, chief executive of Make UK, said: “We welcome the PM’s announcement of Great British Grid as a move to address a clear market failure. We look forward to working with Government on its implementation.”
He said the commitment on industrial energy costs was of greater importance, adding: “The quickest way to do this is removing policy levies off bills, a commitment the PM could so easily have made today.”
Phipson said one in four Make UK members were “either already offshoring activity or actively weighing it up”. He added: “If manufacturers are to feel it, they need action at the Budget and faster delivery of the Industrial Strategy.”
Yselkla Farmer, chief executive of BEAMA, said the proposal “recognises the need to unblock issues of underinvestment in certain areas of the supply chain”.
“But what we cannot afford is a protracted process or uncertainty over funding for grid development,” she said. “We understand the GB Grid proposal is focused on transmission connections, but investment is needed top to bottom.”
She said a clear view of upcoming investments would help manufacturers plan spending on equipment and recruitment, adding: “Critically, it helps the industry avoid delaying decisions through uncertainty of demand.”
Dhara Vyas, chief executive of Energy UK, said the investment was welcome, but “the bulk of this will be private investment”. She said the transmission owners were “spending £90bn in the next five years”.
Andrew Bowie, the Conservative shadow energy secretary, said the prime minister wanted to “nationalise the network”. He added: “The Conservatives would get out of the way, letting businesses build their own gas power and grid connections and bid openly for capacity, and cutting electricity costs for every business through our Cheap Power Plan.”
Matthew Lawrence, founder of the think tank Common Wealth and a former adviser to Burnham, told BBC Radio 4’s Today programme that the UK is “unusual in that it has a wholly privatised grid”, which had led to “decades of sluggishness development and chronic underinvestment”.
The announcement comes ahead of a Budget at the end of next month, with room for manoeuvre narrowed by recent rises in the cost of UK borrowing.
