The big six energy suppliers face being brought into public ownership if Labour wins the next election in a dramatic extension of the party’s renationalisation plans.
The Labour manifesto, launched this morning (21 November), says that under Labour access to energy and water would be treated as “rights rather than commodities”.
The document, entitled “It’s Time for Real Change”, confirms that the party is watering down its recent conference policy to decarbonise the UK by 2030.
But the biggest surprise for the industry in Labour’s manifesto is its pledge that the supply arms of the big six will be brought into public ownership. This goes beyond the party’s position at the last general election when it said it would set up regional suppliers to provide a public-owned option for consumers.
The party has not clarified what it classes as the “big six” and whether Ovo would be included within this as a result of its acquisition of SSE’s retail business.
It says that the remit of the public-owned companies will be to supply households with energy while helping them to reduce their energy demands.
Responding to Labour’s plans, an SSE spokeswoman said: “This is a time for working together now to tackle the climate crisis, not waste years attempting a very costly, complex and controversial nationalisation.”
Energy UK’s director of policy, Audrey Gallacher said: “It is a critical time for the energy sector. Meeting net-zero is a huge opportunity which can deliver benefits for our economy, the environment and for customers, but it will require significant investment by private markets and a sustainable retail sector that can continue to innovate and deliver the benefits for customers.
“Private investment in energy – which was £13.1 billion last year – has created a power sector that has been world-leading in decarbonisation while delivering green jobs, boosting economic growth and lowering costs for customers. Now is the time to radically accelerate progress in decarbonising our economy, not do anything that could slow down the progress the sector is making.
“The energy retail market is more competitive than ever with switching at record high levels and increased choice for consumers. The risk is that these proposals would halt this progress, block innovation and create a situation where new and growing suppliers – who have been gaining an ever increasing share of the market – would be competing against incumbent state-backed companies.”
Networks
Under Labour’s plans, the National Grid would be turned into a new UK National Energy Agency, which would also oversee the delivery of decarbonisation targets.
And 14 new Regional Energy Agencies would replace the existing distribution network operators, with statutory responsibilities for decarbonising electricity and heat and reducing fuel poverty.
Public ownership of networks would accelerate moves to cut emissions, claims the manifesto.
“Whereas private network companies have failed to upgrade the grid at the speed and scale needed, publicly owned networks will accelerate and co-ordinate investment to connect renewable and low-carbon energy while working with energy unions to support energy workers through the transition”, it says.
On costings, the accompanying “grey book” simply says: “Taking companies into public ownership is fiscally neutral by international accounting standards when bonds are exchanged for shares (as in previous nationalisations).”
2030 vision
The manifesto blames privatisation for fuelling increased emissions of greenhouse gases.
“The capture of a natural resource for private profit created a vastly unequal and polluting economy dominated by powerful vested interests.
“Tory privatisation of our utilities has been a disaster for both our planet and our wallets.
“We will put people and planet before profit by bringing our energy and water systems into democratic public ownership.”
But the manifesto falls short of the motion, backed by Labour’s conference in September, that the UK should cut emissions to net zero by 2030.
Instead, it says that Labour’s Green New Deal aims to achieve the “substantial majority of our emissions reductions by 2030”, including ensuring that 90 per cent of electricity generation is from renewable sources by that date.
It also says that half of all heat should be from renewable and low-carbon sources by the end of the next decade, rolling out technologies like heat pumps and hydrogen, while investing in district heat networks.
The manifesto commits Labour to new nuclear power, including a specific pledge to deliver a new plant on Ynys Mon following the collapse of Hitachi’s plans at Wylfa.
It says Labour will trial and expand tidal energy, such as the stalled Swansea Bay lagoon project, and invest to reduce the costs of renewable and low-carbon hydrogen production schemes.
The manifesto also reaffirms Labour’s commitment to deliver 7,000 new offshore wind turbines, 2,000 new onshore wind turbines, expand energy storage and invest in grid enhancements and interconnectors.
It also includes commitments to green the NHS by installing more solar panels on health buildings and switching to electric paramedic vehicles.
Obvious monopolies
In his speech at the manifesto’s launch, the party’s leader Jeremy Corbyn said: “We are proposing nationalisation of what are obvious monopolies.
“Think of water for a minute. Our water industry is in private hands, thanks to what the Tory government did. It is one that has ripped off a lot of the public assets it had. It relies entirely on an infrastructure that was built through public investment. It is making very large profits for hedge funds and overseas owners and goodness knows who else. It is not terribly well-maintained in many parts of the country. In fact, we fill Loch Ness every year with the waste of water from leaks in our pipes all across this country. I think we can do better than that.”
He went on to say: “Our public ownership model will be one where there is consumer involvement, where there is worker involvement in the running of it, where there is local government involvement in the running of it, where there is a regional voice in all of those companies. So, it won’t be top-down nationalisation with a board appointed by government. It will be something more dynamic, more consumer-orientated, more community-orientated.”
Speaking about the party’s broader plans, he said: “Labour will transform our economy so that no one is held back, and no community is neglected. And that transformation will be a green transformation.
“We can no longer deny the climate emergency we can see it all around us, as the recent floods in Yorkshire and the East Midlands have shown.
“We have no time to waste.”