How the assets and resources of a society are owned fundamentally shapes how that society operates and in whose interests. For the UK, this is perhaps most brutally evident in the energy system: the privatisation of every element of our energy system, from generation to transmission, distribution to supply, has put the needs of the energy giants and their shareholders above the public interest.
The results are now clear: chronic levels of fuel poverty, dependence on volatile and inflationary fossil fuel imports, and enormous transfers of wealth from households to large firms and their global shareholders. That is why Labour’s announcement that it would create a publicly-owned clean power generator, “Great British Energy”, matters. As a tool to achieve climate action, durably lower bills and nurture public wealth, it has the potential to begin the shift away from an energy system – and economy – organised around the interests of the few.
To understand why Great British Energy holds such potential, we first need to consider how we got here. These overlapping crises are linked to the deliberate destruction of what the historian David Edgerton has termed the “national economy”: an agenda of national development driven by tools of public ownership, economic planning and domestic production of essentials such as energy and food. From the late 1970s onwards this “national economy” – much like the idea of a coherent British nation – was decisively undone. The privatisation and internationalisation of huge amounts of the British economy was at the forefront of this process (the UK accounted for 40 per cent of the total value of all assets privatised across the countries in the OECD between 1980 and 1996). Arguably, nowhere was this more pronounced than the energy system.
The energy system was transformed from one predominantly owned by the public and developed in the public interest to among the most privatised systems in the world. We are one of the few countries in Europe to have transferred the national grid, the backbone infrastructure of the electricity system, into private hands; though we have a “National Grid”, it belongs not to the nation but to globally distributed shareholders, concentrated among a handful of financial firms. Supply companies have acted as funnels for transferring wealth from households to shareholders; during the 2010s over £40bn worth of dividends flowed from our bills to investors in the “Big Six” companies. Distribution companies, meanwhile, which own the infrastructure for local distribution of gas and electricity, enjoy the highest profit margins of any sector in the UK economy. And British gas producers and electricity generators are forecast to make excess profits totalling as much as £170bn ($199bn) over the next two years, according to Treasury estimates. Why? Because their ownership of energy assets and infrastructures is a licence to extract wealth from the rest of society on an extraordinary scale.
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Nor is this unique to fossil-fuel based energy. The UK squandered the wealth of the North Sea once before in the 1980s as its oil and gas fields turned into a rentiers’ paradise. In stark contrast to how Scandinavian countries developed their hydrocarbon wealth, in the UK this bounty was deliberately redirected toward private accumulation. At present we are repeating this mistake with the growth of the renewables sector. Nearly 85 per cent of the UK’s offshore wind capacity is foreign-owned. Crucially, 44 per cent of this capacity is held in public ownership – it’s just the public of other countries. For instance, while Denmark owns 20 per cent of the UK’s offshore wind capacity, the UK government owns a negligible 0.03 per cent, less even than the Malaysian government. The common resources of the wind, sun and waves are not being harnessed and stewarded for the public benefit; instead they’ve been oriented so as to generate income for multinationals, private equity giants and foreign state-owned companies.
A public clean energy generator can begin to break this pattern. Building, operating and owning new clean energy infrastructure, without the need to pay dividends and with the cost of borrowing to invest lower for the public sector, will generate savings that can be passed on to households and businesses. Instead of trying to nudge the market to deliver, a public generator can plan and create the abundant and clean energy we need on a timescale that begins to approach the urgency of the climate crisis. And by reducing imports, domestic clean energy can stabilise an economy that is importing not just fossil fuels but inflation.
Of course, much remains up for contestation and debate in terms of Great British Energy’s design and operation. The stated goal is to create a clean power national champion the size of France’s EDF, one of the largest clean energy operators in the world. Yet the terms on which it would do so, the manner in which it would operate, and how Great British Energy would relate to the rest of the sector, are unresolved. Moreover, though its potential underscores why public ownership can be such a powerful tool, it raises the question: if public ownership is an effective mechanism for developing clean energy generation, why not deploy similar tools to organise vital services such as water or communication networks for the public good?
The numerous crises we currently confront are inseparable from how we have organised claims against the world. By reimagining energy as a public good – backstopped by tools of democratic planning, social purpose and common ownership – we can begin to articulate an alternative vision of the future. An energy system rooted in material and financial extraction could be powered instead by the commons, focused on meeting social and environmental needs. Great British Energy is not enough on its own. But for now, it offers a wedge with which to prise open the much broader conversation about the way we organise our economies and our lives, and why ownership is at their heart.
Mathew Lawrence and Adrienne Buller are co-authors of the recently-published Owning the Future: Power and Property in an Age of Crisis (Verso)