UK Treasury to Cut GB Energy Funding, Undermining Miliband’s Net Zero Plan

The UK Treasury is reportedly reconsidering its financial commitment to GB Energy, Labour’s state-backed renewable energy initiative, in a move that could see billions stripped from the project. As part of its June spending review, the government evaluates funding allocations, sparking concerns over the nation’s clean energy ambitions and presenting a political test for Energy Secretary Ed Miliband.

GB Energy was a cornerstone of Prime Minister Keir Starmer’s Labour government—a bold £8.3 billion pledge designed to accelerate renewable energy investments while easing household energy costs. But the Treasury’s sweeping “zero-based review” of government spending, driven by heightened defense priorities, has put this flagship initiative under scrutiny.

One proposal under discussion? Axing the £3.3 billion earmarked for low-interest loans distributed through local councils—funds intended to support solar panel installations and community wind farms. While no final decision has been made, industry insiders warn that GB Energy’s financial backing is increasingly precarious despite Labour’s promises.

Despite fierce opposition from environmental advocates, this potential funding cut for Miliband is another political setback following Chancellor Rachel Reeves’ recent approval of Heathrow’s third runway. Slashing support for GB Energy could further weaken Labour’s stance on clean energy and threaten its commitment to decarbonising Britain’s power sector by 2030.

Operational challenges also loom large. Despite an initial £100 million allocation in last year’s Autumn Budget, GB Energy remains in its infancy, struggling to establish leadership and structure. Headquartered in Aberdeen, the company has yet to secure a permanent chief executive. Its interim leader, Dan McGrail, was seconded from RenewableUK on a temporary six-month contract, and sources suggest finding a long-term CEO has been "challenging."

Adding to the uncertainty, GB Energy’s ambition of creating 1,000 jobs in Aberdeen now has a far longer timeline—possibly stretching over two decades.

The UK’s renewable energy transition is unfolding against economic turbulence, geopolitical tensions, and a cost-of-living crisis. The government must now juggle fiscal prudence with its commitments to net zero while attempting to stabilise energy prices.

Labour’s initial promise—that GB Energy would save households £300 annually—has yet to materialise. Instead, energy bills have climbed by £170 since last July. If funding is reduced, investor confidence in the UK’s renewable energy sector could wane, mainly as offshore wind and infrastructure projects rely on strong government backing.

As the June spending review looms, ministers must weigh their options carefully. Will they uphold Labour’s clean energy ambitions, or will financial cutbacks derail momentum? The Treasury insists that it remains "fully committed to GB Energy," but whether that commitment translates into real financial backing remains to be seen. The next few months could shape the future of Britain’s green energy strategy—and Labour’s political credibility.