King Charles has set out the new government’s legislative programme for the year. The development shows the Labour Party’s ambitious plans, although it does leave some questions unresolved.

E-FWD members submitted questions last week during, and ahead of, a discussion with Daniel Johnson, Labour MSP. Perhaps top of the list were questions around the Energy Profits Levy (EPL), also known as the windfall tax. Official reports today shed little light on this.

Speaking on a webinar for the Institute for Government, Chris White, a former special adviser, noted that 40 bills was “a lot to get through … There’s only 75 days when the House of Commons is carrying out business, with the government in control. Not everything can be covered in this first year.”

The practicalities of getting the legislative programme under way are notable, with the new government needing to get up to speed quickly.

And it must also be remembered that passing bills is not how success should be measured.

“It’s actually changing things in the real world,” Alex Thomas, programme director at the Institute for Government, said. “Legislation is not everything. Beyond the legislative there’s so much important for government to operate and improve in the way of working.”

The government is working on its plans such as GB Energy, which will aim to provide a push for private investment on particular projects. On the top level, though, reforms to planning should offer a pull, bringing in a broader base of companies to consider new opportunities.

*Prime Minister Keir Starmer and King Charles*

Q. How will government support planning reforms to allow energy projects to go ahead?

The government said planning restrictions were currently a brake on growth. The Planning and Infrastructure Bill aims to address this, with the aim of being an “enabler of growth”. People should be involved with how infrastructure – and houses – are built, rather than being able to simply prevent plans.

The bill aims to “accelerate the delivery of major infrastructure projects in alignment with our industrial, energy, and transport strategies”.

The legislation will simplify the consenting process for major infrastructure projects and improve National Policy Statements.

Practically, it will aim to accelerate the pace of decisions from local councils and for Nationally Significant Infrastructure Projects (NSIPs).

While much of the government’s plans focused on bite-sized bills, the planning bill appears much more ambitious. It is clear the UK struggles to get projects built fast, not least as a result of legal challenges.

Ashfords partner Jonathan Croley noted that, to achieve the 2030 target, “spades need to start getting in the ground immediately. Well-publicised delays in the planning system, combined with often vocal local opposition can majorly slow these projects down. Labour has promised planning reform, and it will need to work if the party’s renewable energy goals are to be met.”

Croley called for the process of building new projects, such as solar farms, to be simplified. “The more this process can be streamlined, the easier it will be for investment to be deployed.”

Britain Remade CEO Sam Richards acknowledged the message of intent from the government. For instance, moves to ease the path for onshore wind farms and ministerial approval for three larger solar farms.

“Fixing planning isn’t an overnight task, but the government has hit the ground running,” Richards said. “They now need to ensure this Bill delivers the home Britain needs.”

Q. What policies would Labour implement to ensure net zero’s affordability?

Expected changes to the windfall tax are likely to accelerate North Sea decline. At least in the short term, this will increase the UK’s needs for imports.

The government insists, though, that its decarbonisation plans will cut emissions and costs for consumers. The Great British Energy Bill sets up the company to “own, manage and operate clean power projects up and down the country”.

GB Energy will deliver “energy independence”, with “home-grown energy and lower bills”. It will have £8.3 billion to invest over the five years of this Parliament. It aims to invest in the supply chain and projects. Secretary of State for Energy Security and Net Zero Ed Miliband will provide a strategic priorities statement for the company, to ensure it aligns with government plans.

GB Energy will help “mitigate existing market failures”, it continued.

Building up domestic decarbonised power will reduce imports. “Decarbonising the power system would break” the gas link for power prices “and in turn the exposure of UK electricity prices to global gas prices”.

Russell Borthwick, CEO at Aberdeen & Grampian Chamber of Commerce (AGCC), said the GB Energy bill was encouraging for the oil and gas sector. It “refers to supporting the further reduction of emissions from our oil and gas sector, rather than seeking to accelerate its decline. This is important but must now be matched with a fiscal regime which supports continuing investment and production from the North Sea for as long as we need it.”

Miliband has talked of supporting a “rooftop revolution” for solar panels on domestic houses, although there was no mention in the King’s Speech.

*11/07/2024. Kent, United Kingdom. Secretary of State Ed Miliband visits Little Cheyne Court Wind Farm. Picture by Zara Farrar / No 10 Downing Street*

Funding bodies

Alongside the bill on GB Energy, the government has also set out plans for reforms to the Crown Estate, via another bill.

In future, the Crown Estate will be able to borrow from the Exchequer, should this be required. As a result, the agency will be able to invest with its cash reserves. It currently is prevented from doing so in order to safeguard future losses. This bill will not apply to Scotland, though.

As a result, the Crown Estate should be able to support 20-30 GW of new offshore wind leases in England and Wales by 2030.

The National Wealth Fund Bill will have the ability to provide another £7.3bn, in alignment with the UK Infrastructure Bank and the British Business Bank. This venture aims to catalyse £3 of private money for every £1 of public investment.

The aim is to help British businesses become “more competitive, cut household energy bills, and create new jobs – all of which will enhance the UK’s ability to leverage green investment”.

These are not new ideas. The government launched the Green Investment Bank in 2012, to then sell it off in 2017 to Macquarie. The government launched the British Business Bank in 2014, which has moved into the decarbonisation area.

Crowding in

Sky News reported this month that the new government would hold a global investment summit in October. It may reveal more details on the National Wealth Fund at this event.

Social Market Foundation researcher Niamh O Regan said that, in 2023, renewable energy provided just under a third of UK generation.

“There is a long way to go to become an clean energy super power, and the initial budget to help us get there is relatively modest. It is also heavily reliant on the private sector stepping up and investing alongside the government, and there is some question over whether the government is stumping up enough to stimulate the further investment that is needed.”

Innovation

Ross Driver, fund manager at Foresight Solar Fund, said the government should also move to a “clear, stable and internationally competitive method for electricity pricing”. This, he said, would provide certainty to the renewables market.

“The energy transition is one of the biggest investment themes of our generation and we urge the government to listen to the concerns of renewable infrastructure providers to create a supportive environment to accelerate public and private investment and see clean power realise its full potential – bringing both energy independence and cheaper bills.”

Ashfords’ Croley said GB Energy was “eye catching” but that the response had been muted. “At best it could offer a useful partner for risky schemes, at worst it could be unnecessary competition.”

The task is bigger than that of GB Energy alone, he continued. “This is one of the greatest infrastructure projects in recent history and requires a good deal more than relatively modest central government investment and warm sentiment if it is to be a success.”

Balance Power CEO Phil Thompson called for GB Energy to show a “clear path” for decarbonising energy intensive industries.

“Delivering renewable energy to businesses by private wire will address this while slashing energy costs, making businesses more competitive and boosting the economy. It can also reduce strain on an already problematic energy network, giving additional energy resilience to businesses.”

Thompson went on to call for support for partnerships between developers and the government “to facilitate physical and virtual power purchase agreements. These agreements will secure a stable market for renewables, driving investment and kick-starting vital projects.”

Q. Is the government ready to intervene to address forthcoming skills shortages?

The King’s Speech set out plan for the Skills England Bill. This will transfer functions from the Institute for Apprenticeships and Technical Education (IfATE). The aim is to cover everything from basic skills through to those that are highly technical.

Skills England will convene employers, unions, education and training providers to work out what is needed. The aim is to ensure training is providing the skills needed, for instance by using vacancy data for evidence. This bill will cover England and Wales.

One of the steps the government expects will deliver change is around devolving power in England, with the aim of giving local leaders more control in driving local growth. Mayoral authorities will hold 62% of the Adult Skills Budget for 2024-25.

Work visas have increased substantially in recent years. The bill will create a formal link between migration data and skills policy.

Rovco CEO Brian Allen raised concerns about the “looming skill shortage” in the offshore wind industry. This “will become, if it isn’t already, a major obstacle to achieving Labour’s ambition of 60 GW of offshore wind capacity by 2030. Offshore wind alone is already short of the 70,000 workers needed to achieve this target.”

Higher tech

Allen said new ways of working, alongside technology, would help – but that these would also need investment.

“Labour must support – through routes such as apprenticeships and SME investment – the tech skills that will be the future of the offshore wind workforce,” he continued. “Ultimately, we cannot see our tech and sustainability objectives as separate priorities – they are inextricably linked. To succeed in one, we must excel in both.”

Levidian CEO John Hartley said putting “green prosperity” at the heart of government plans would “give the business community the confidence it needs to make critical investments into future growth. Now is the time to unleash UK climate technology as we build GB Energy, deploy new infrastructure and use this expertise to support at scale and create millions of green jobs. We need more diverse bets on UK climate tech to ensure robust growth, job creation, and increased tax revenues.”

Unanswered questions

There remains uncertainty around the government’s agenda in some key areas. The domestic oil and gas industry received no discussion, although there was some talk about moving away from imports.

There was scant mention of carbon capture and how that may play a role in the power sector, but also around tackling industrial emissions.

At its heart, the new government has set its stall on delivering growth, in order to finance its expansion plans. The UK clearly needs new state investment – and state competency – in a number of areas.

Labour has rejected the idea that extracting more tax from the North Sea is intended to end the oil and gas industry. However, with the government dropping its defence of the planned Whitehaven coal mine, it is clear Labour is much less supportive of hydrocarbons than the Conservatives.

DESNZ denied last week that it was banning all future drilling in the North Sea. The allegations found a ready audience in industry, though, amid scepticism in the new government.

Progress in supporting decarbonised power is welcome, but there is still much that could be clearer for oil producers.

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