The UK Treasury is weighing cuts to GB Energy’s funding in its June spending review, putting Labour’s flagship renewable energy initiative under threat. With £3.3bn in low-interest loans at risk and broader fiscal priorities shifting, the decision could slow Britain’s clean energy transition and spark political fallout.
The UK Treasury is reportedly considering reducing its planned funding for GB Energy, the state-backed renewable energy company launched by Labour, as part of its upcoming June spending review. The move, which could see billions stripped from the initiative, raises concerns over the future of Britain’s clean energy transition and presents a political challenge for Energy Secretary Ed Miliband.
GB Energy was created as a flagship policy under Prime Minister Keir Starmer’s Labour government, with a £8.3 billion funding pledge aimed at driving renewable energy investment and cutting household bills. However, the Treasury’s ongoing “zero-based review” of government spending—spurred by a renewed focus on defence investment—has placed this commitment under scrutiny.
One of the proposals under discussion is cutting the £3.3 billion allocated for low-interest loans via local authorities, which were intended to support projects such as rooftop solar panels and shared-ownership wind farms. While the Treasury and the Department for Energy Security and Net Zero have yet to confirm any final decisions, industry insiders warn that GB Energy’s funding is no longer guaranteed despite Labour’s manifesto pledge.
The potential funding cuts mark another setback for Miliband, following his earlier defeat when Chancellor Rachel Reeves backed the expansion of Heathrow’s third runway—despite opposition from environmental advocates. Industry experts suggest that reducing financial support for GB Energy could undermine the government’s commitment to decarbonising the UK’s power sector by 2030.
GB Energy, which was only allocated an initial £100 million in last year’s Autumn Budget, faces additional operational hurdles. The company, headquartered in Aberdeen, has struggled to appoint a permanent chief executive and remains in the early stages of development.
The company’s interim CEO, Dan McGrail—on secondment from RenewableUK—was appointed on a six-month contract, but sources indicate that recruitment for a long-term leader has been “challenging.” Adding to concerns, GB Energy has already admitted that its target of creating 1,000 jobs in Aberdeen could take up to 20 years to materialise.
Britain’s renewable energy ambitions come at a time of broader financial and geopolitical challenges. The government is seeking to balance economic growth, national security, and net-zero commitments, all while facing pressure to stabilise household energy costs.
Labour’s original promise that GB Energy would reduce energy bills by £300 per household has not yet materialised, with consumers instead seeing price increases of £170 since last July. Further funding reductions could dampen investor confidence in the UK’s renewable sector, particularly as offshore wind developments and infrastructure projects rely on government-backed financing.
As the spending review approaches, ministers will need to navigate the delicate balance between fiscal prudence and maintaining momentum in Britain’s clean energy transition. While the government maintains that it is “fully committed to GB Energy,” the coming months will determine whether financial backing aligns with political assurances.