Labour's legislative programme: energy and infrastructure to drive growth

For industry, investors and the public alike, the King’s Speech delivered at the State Opening of Parliament serves as a useful barometer of government priorities for the coming year. The first King’s Speech under a new Labour government on 17 July 2024 was no exception, setting out an ambitious legislative agenda of 40 bills. 

Reflecting its election manifesto commitments (see our previous article here), the new government put “securing economic growth” firmly at the centre of its new package of bills, driven by a significant focus on energy and infrastructure, transport and planning reform. This post highlights several key bills of interest.

Becoming a “clean energy superpower”

Recognising the “urgency of the global climate challenge” and reiterating that it is “committed to the clean energy transition”, the government plans to introduce the Great British Energy Bill, providing the legal basis for the creation of Great British Energy (GB Energy). To be headquartered in Scotland, this is described as a “publicly owned energy production company which will own, manage and operate clean power projects”. This is a subtle change to the manifesto which emphasised co-investment, rather than operations. It also suggests the focus will be on low carbon generation and power storage projects, and their supply chains, rather than investment in networks or supply businesses. With a UK-wide remit, GB Energy will be equipped with £8.3bn of new capital over the course of the new Parliament. Private sector investment will however remain key. It is envisaged that GB Energy will stimulate private sector investment, “investing in partnership with the private sector”. By leveraging the capabilities of the public sector, and “in combination with additional electricity market reforms”, the government hopes the new public energy company can incentivise private investment, thereby increasing the speed and reducing the cost of deploying renewable energy generation capacity. In line with the government’s desire for GB Energy to support delivery of their clean energy mission by 2030, the bill will empower the Secretary of State to provide GB Energy with the financial backing needed to meet its aims, and to prepare a strategic priorities statement to ensure GB Energy focuses on government priorities. 

Although it made fewer headlines, it is notable that the government plans to reform and modernise the Crown Estate – a significant landowner with rights to exploit the seabed of England and Wales – to give it powers to borrow and invest more widely and at a faster pace. Currently the Crown Estate is not able to use its large cash reserves to invest, and the government hopes the changes made by the Crown Estate Bill will unlock significant investment in public infrastructure and, in particular, “help to accelerate and quadruple offshore wind capacity by 2030”. 

As a further step in its mission to make the UK a “clean energy superpower”, the government also intends to bring forward a Sustainable Aviation Fuel (Revenue Support Mechanism) Bill to support the development of the UK’s sustainable aviation fuel (SAF) production and the construction of SAF plants. This builds on proposals for a SAF mandate which is expected to be introduced in 2025 via regulations made under the Energy Act 2004 and will require suppliers to have at least 10% SAF in their fuel mix supplied to airlines. 

The government is notably also using non-legislative routes to unlock the UK’s energy potential. These include lifting the de facto ban on onshore wind development and establishing a UK Onshore Wind Industry Taskforce, publishing a solar roadmap and launching a new Mission Control centre (led by Chris Stark, the former head of the Climate Change Committee), focused on achieving a clean power sector by 2030.

Infrastructure for growth

Having identified that “the current planning regime acts as a major brake to economic growth”, the government intends to deliver a Planning and Infrastructure Bill ushering in reforms to accelerate and “streamline the delivery process for critical infrastructure”, including upgrades to the national grid and renewable energy projects. Positioned as a key enabler of Labour’s 2030 clean power mission and net zero obligations, the bill will also “simplify the consenting process for major infrastructure projects and enable relevant, new and improved National Policy Statements to come forward”, and be updated every five years to provide certainty to developers and communities.

Signalling a subtle shift regarding stakeholder views in the decision-making process, in an accompanying press release, the government said that “by enabling democratic engagement with how, not if, homes and infrastructure are built – the major brakes on the planning system will be addressed to support sustainable growth”. Developers of energy and transmission projects may take some encouragement from this. Interestingly, in the days leading up to the King’s Speech, a flurry of long-delayed planning decisions were made on solar farms and power lines. Other significant measures include further reforming compulsory purchase compensation rules, increasing local planning authority capacity and using development to fund nature recovery.

Transport moves

The Railways Bill and the Passenger Railway Services (Public Ownership) Bill drive forward plans to establish Great British Railways (GBR), a new public body with centralised responsibility as both the franchising authority and infrastructure manager for the rail network in Great Britain, simplifying fares for passengers and improving operations such as timetabling. Significantly, Labour intends to deliver its election promise to progressively bring private train operations into public ownership as existing contracts expire (or if operators fail to meet their commitments).  A new, independent passenger watchdog, the Passenger Standards Authority, will also be established to monitor standards and champion improvement in service performance against a range of measures.

The High Speed Rail (Crewe-Manchester) Bill has been carried over from the previous parliamentary session, with the government confirming that it will not reinstate the second Phase of HS2 (the high speed Birmingham to Manchester leg) which was controversially cancelled by the previous administration. Instead, it plans to “repurpose” the bill to provide powers to construct and operate rail projects which improve east to west connectivity across the north of England, including new stations at Manchester Piccadilly and Manchester Airport.

In addition, a bill will be introduced to give local leaders in England more control over bus services. The Better Buses Bill proposes to give those leaders new powers to franchise local bus services and more control over bus funding. It will also lift the restriction on the creation of new publicly owned bus operators.  

Water reset

Bolstering the enforcement regime applicable to the water sector is a clear priority for the new government, which acknowledges “the need to improve water quality”. The Water (Special Measures) Bill proposes to “strengthen regulation”. In addition, the bill will ensure personal criminal liability for severe failures by water company executives and give the regulator new powers to ban the payment of bonuses if environmental standards are not met, as well as to impose automatic and “severe” fines. Whilst there does not appear to be appetite for public ownership in the sector, going forward the government noted that it will “outline further legislation to fundamentally transform and reset our water industry and restore our rivers, lakes and seas to good health.”

Support for investment

Delivering growth and a greener economy require investment at a time when the new government is facing intense fiscal pressures. Crucially – as flagged ahead of the election – it will bring forward a National Wealth Fund (NWF) Bill to support the decarbonisation of UK industry (this is expected to include ports, green hydrogen, clean steel, carbon capture, industrial clusters and gigafactories). Put on a statutory footing and equipped with additional funding of £7.3bn, the NWF will aim to attract £3 of private investment for every £1 of public investment, and “crowd in” £20 billion into priority sectors. In its King’s Speech briefing, the government noted that the fund “will provide an improved and more expansive offer to private investors with a clear link to projects essential to delivering national missions and long-term industrial strategy.” Funds will be deployed immediately via the UK Infrastructure Bank (UKIB) and the government has already begun work to align UKIB and the British Business Bank under the NWF to create a “single coherent offer for businesses and a compelling proposition for investors, to smartly deploy public capital to unlock investment opportunities”.  It has been reported that further details of how the fund will be structured may be unveiled at the government’s Global Investment Summit In October. 

Down to business

The work begins here for Keir Starmer’s government. He will be hoping that, with 411 Labour MPs and a working majority of 180, he will be able to progress this legislative programme quickly and efficiently. So far industry response has been broadly positive – the Confederation of British Industry noted that “reforming planning systems, speeding up approvals for major infrastructure projects… can give businesses the confidence they need to unlock investment”, adding that “the key to turning the government’s legislative agenda into a roadmap for sustainable growth will be a partnership of collaboration with industry”. Developers, investors and lenders in UK energy and infrastructure projects will be seeking further clarity on the detail of the legislative agenda in order to assess the implications on their businesses and investments.