The headlines about who’s up and who’s down in the Cabinet following Chancellor Rachel Reeves’ spending review have all been written. Wes Streeting (securing a 3 per cent annual increase in NHS funding), up; Angela Rayner (handed £39bn over ten years for an affordable house-building programme), up; Yvette Cooper (Home Office spending to be cut by 1.7 per cent), down. One frontbencher long expected to be joining the Home Secretary’s coop of fiscal confinement was Ed Miliband. But that did not come to roost. Beneath the headlines, a new narrative is emerging: that the Energy Secretary is an unexpected winner of Rachel Reeves’s first spending review.
Miliband will be relieved that the Spending Review reaffirmed Labour’s £8.3bn manifesto commitment for the state-owned clean energy company, GB Energy. But some give and take between Reeves and Miliband was clearly needed to wrangle that. The Chancellor, giving billions towards nuclear projects – including £14.8bn on building the Sizewell C plant, £2.5bn on a cluster of small nuclear reactors, and the same amount on developing experimental “fusion” technology – hands Miliband key responsibility over Britain’s transition to clean power. (These sit alongside established funding commitments to insulate homes – £13.2bn – and additional funding given for two new carbon capture projects.) But there is also some take – effectively £2.5bn worth from Miliband’s purse strings. Great British Energy will share its £8.3bn budget with the previously separate government body that was tasked with managing domestic nuclear projects (Great British Nuclear); they will now co-exist as sister bodies, with the newly-minted Great British Energy – Nuclear overseeing the new projects.
Cue the headlines of Great British Energy being “nuked”. (The party line is that it is a long-trailed “alignment”; though this was perhaps expected of responsibilities, not necessarily of budgets.) But, following the Spending Review, the prevailing mood at the Department for Energy Security and Net Zero (DESNZ) is positive. Particularly considering the previous speculation about tensions between Miliband and Reeves, and the relationship between economic growth and Britain’s net zero commitment. This had reached a head after the Chancellor’s decision to approve an expansion of Heathrow airport in January, despite private (but never publicly expressed) concerns from the Energy Secretary.
Perhaps Miliband was picking his political battles. His department’s settlement from the Spending Review has the biggest amount of capital spending behind it. Alongside Rayner, Miliband was rumoured to have stormed out of a meeting with the Chancellor over proposed cuts earlier in the Spending Review negotiation process. From this wrangling has come the most significant programme of investment in clean energy in a generation.
“We are renewing Britain,” Reeves declared during her statement in Parliament on Wednesday (June 11), “but I know that too many people in too many parts of our country are yet to feel it.” There are few Cabinet members who will face this dilemma more acutely than Miliband, who, in an energy-fragile world, will be in the firing line if Britons do not “feel” better about how much their bills are. Especially given that pre-election, Miliband and Labour promised to lower energy bills by £300, and to also help industry with their costs. (Bill for consumers have gone up by nearly £300 since the election.) And while the investments announced in the Spending Review will go some way to reducing them in the medium-to-long term, like most of the benefits of the capital investment projects Reeves is using to butter up the electorate, it mainly promises “Jam tomorrow”.
Many factors, some out of Miliband’s control, will influence the government’s success in not only lowering bills, but the “energy security” that he has promised Britain. Will there be enough skills in the current and future workforce to meet demand? Is the private sector confident enough to engage in public-private partnerships with the government? And perhaps most pressing, given the rise of Reform: how will the government’s new planning measures impact the building of key energy infrastructure amid a growing anti-net zero zeal and the party’s new leadership of ten councils?
All of these questions will have an impact on Miliband’s guiding cause (and measure of his success): energy prices. Some of the answers could become clearer by the government’s infrastructure and industrial strategies, expected later this month. It “will need to provide more details on how the UK industry’s energy bills will be cut, as they are the highest in Europe,” the Green Alliance think tank noted in its post Spending Review analysis. “The [Spending Review] contained no indication of any funding allocated for this [specific] purpose, which is cause for concern.”
Coming out of the Spending Review in a comparatively good stead for a regularly undermined policy area – famously referred to as “Green crap” by David Cameron – Miliband and DESNZ can claim success. But while the Energy Secretary has won the political battle, he has not yet won the war over Britain’s clean energy future.
This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero.
Content from our partners
Related
