Opinion

Power for the people: It's time to renationalise the UK energy system

Market instability and global warming show the energy system has failed, but there is a clear way ahead, argues environmental expert Jon Burke as the energy price cap rises.

cost of living crisis

Average households could be paying out an extra £700 per year on energy. Image: Pexels

With 50 per cent of the UK population under 40, private ownership of utilities is all a sizeable proportion of the country have ever known. The price volatility and multiple energy company failures in recent weeks may to them appear, while worrying, simply ‘how the world works’. 

But from the end of the Second World War until the 1980s the British state had increasingly centralised key utilities under nationalised public ownership. And prior to this, it was local authorities that pioneered the energy system. 

Former councils like the Metropolitan Borough of Shoreditch – subsumed into Hackney in 1965 – prided themselves on their mission to bring energy to the masses.

‘More Light, More Power’ went its motto and it operated the impressively-titled Shoreditch Electricity Generating Station and Refuse Destructor. 

Not only did the public sector build the overwhelming majority of this country’s energy infrastructure, it also successfully oversaw the generation, distribution, and supply of it for the majority of its existence. 

So it is surely not a stretch of the imagination to conclude we can build a new and better energy system to serve society, rather than the shareholders and non-executive directors of the ‘Big Six’ and the distribution network operators.

There is plenty of evidence internationally that critics could reference to demonstrate that direct state intervention in the energy system is no panacea. 

Look at how gas-rich Russia uses its majority publicly-owned companies like Gazprom to exert political influence over vulnerable states and sustain political leadership.

The historians amongst us will also be minded to warn it was the politics of the Organization of the Petroleum Exporting Countries, rather than market failure, that brought about the hugely destabilising ‘oil shocks’ of 1973 and 1979.

But there is also good reason to be optimistic that a publicly-owned energy system could be a huge success, given the UK’s high democratic standards, commitment to the rule of law and largely proud history of state energy system ownership.

A truly enormous amount of investment is required to hit targets on offshore wind, hydrogen and grid infrastructure

And the prize for success isn’t merely limited to decoupling ourselves from dependence on questionable regimes, or even ensuring energy remains fairly priced and accessible but, most importantly of all, to raise the revenue needed to completely decarbonise our system in line with the stretching requirements of the Climate Change Committee’s Sixth Carbon Budget.

In this somewhat  dryly-titled document, government advisors are clear that for the UK to meet its legally-binding commitments, 100 per cent of our electricity alone needs to be low carbon by 2035. 

A truly enormous amount of investment is required to hit targets on offshore wind, hydrogen, and grid infrastructure. And what more sensible – or progressive – way could there be of helping to finance that than through the £3.7bn of annual savings, not to mention the profits, that the University of Greenwich’s David Hall concluded would be derived from public ownership of the energy system. 

However good the idea of a publicly-owned energy system in the UK may be, though, change requires political momentum. If governments are there to defend the status quo, then surely it is the opposition that the public can rely on for fresh thinking? 

Labour went into the 2019 General Election with – whatever their other flaws – a commitment to public ownership of industries of strategic national importance that has consistently proven popular amongst the voters of all mainstream parties. 

So, it came as a surprise when Keir Starmer appeared to contradict Labour’s position – and his own leadership campaign pledge – on The Andrew Marr Show with a flat “no” in response to whether he would consider nationalisation of the ‘Big Six’ energy companies. 

Starmer did, though, indicate that while he opposed crude nationalisation, he was in favour of a more decentralised model of public ownership. 

Having founded the publicly-owned Hackney Light & Power energy services company while cabinet member for energy in the borough I, and I dare say many local authority leaders, would welcome a debate about how councils can play a meaningful role in transforming the local energy system.

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Time is, however, running out for the Labour leader to ‘pick a lane’. 

As Milton Friedman famously said “only a crisis produces real change”. 

If those in a position to shift mainstream political opinion on who controls the energy system don’t act soon, the moment will pass and the UK will lose a key tool in improving national energy security, reducing geopolitical instability and generating a major source of finance for the transformation required to avert global warming apocalypse.

Jon Burke works with local authorities to help them meet the decarbonisation and environmental aspirations set out in their climate emergency declarations. He tweets about getting to net zero @jonburkeUK.

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