What Labour means for your energy bills: can its GB Energy plan really save households £300 a year?

The Labour Party’s election victory marks a turning point for the UK, and energy bills are no exception.

The average British household currently pays annual energy bills of £1,568 thanks to Ofgem’s price cap, a figure that is set to rise later this year.

In response, Labour’s main energy policy is to launch a state-funded company called GB Energy, which the party claims will save every household £300 on their electricity bills.

New Prime Minister Keir Starmer even referenced GB Energy in his first speech as leader, speaking of “the opportunity that clean British energy offers and that it cuts energy bills”.

Now that Labour is safely in power, GB Energy has the green light to swoop in once the party is formally installed.

So how will Labour’s GB Energy Bill work and what will it mean for household bills?

What is GB Energy?

GB Energy will be an independent but state-funded organisation that will invest in renewable electricity.

This includes energy from wind, including offshore wind, solar and hydrogen.

These projects could be very local in scope, such as a wind farm operated by a local authority and used to reduce the energy bills of local households.

GB Energy will not produce green energy itself, but will finance projects that do so.

The Labour Party hopes to create 100% renewable electricity by 2030.

GB Energy would also fund ways to capture and store carbon.

The organization will also make the country more energy secure by reducing dependence on importing fossil fuels, such as natural gas, from abroad.

The Labour Party has also made a bold claim: GB Energy will create 650,000 new jobs.

How will GB Energy reduce energy bills?

Labour has yet to define exactly how GB Energy will work, including how it can save every household the promised £300 a year by 2030.

But if GB Energy is successful, there should be huge savings, as renewable energy is cheaper than energy produced from fossil fuels.

This is because there is no need to purchase the fuel needed to generate power, unlike gas, for example, which currently accounts for about a third of electricity needs.

By increasing the amount of renewable electricity and slowly moving the country away from gas, Labour hopes to drive down energy bills.

More renewable energy nationwide means energy prices would have to fall by £300 a year, Labour campaign co-ordinator Pat McFadden told the BBC.

Simon Francis, coordinator of the Ending Fuel Poverty Coalition, said: ‘Reducing bills permanently will take time, but short-term steps can be taken to help struggling and disillusioned households.

‘The new Government must earn public trust by protecting vulnerable households, reducing energy debt, pushing for more onshore wind, introducing changes to energy meters, stepping up insulation schemes, reforming fixed charges and ending energy industry speculation.’

How will GB Energy be financed?

Labour said GB Energy will be funded by £8.3bn in its first parliament, which will come from extending the windfall tax on oil and gas companies.