“Great British Energy will seek to generate publicly‑owned revenue to reinvest into future energy projects, creating further benefits for the U K taxpayers, billpayers and communities.”
Great British Energy Founding Statement. p.9
https://www.gov.uk/government/publications/introducing-great-british-energy
Great British Energy has five functions, the first of which is “Project investment and ownership”. Included in this first function is the idea that the company can be used to generate publicly owned revenue.
The idea that a government owned company can ‘generate revenue’ for the government is strange if you take a ‘sectoral balances’ view. By this I mean if we consider the government as an entity in the ‘economy’ then by definition everything that is not the government is the ‘non government’ sector - the highest-level divisions of the non-government sector being the “domestic private sector” and the “foreign sector”.
The stated goal seems to be to invest in clean energy generation primarily in the UK. This means most of the energy generated will be consumed in the UK and so ultimately it is UK energy consumers who are the main source of this revenue. Conclusion: the plan is for GB energy to draw money away from UK energy consumers as the source of the”publicly owned” revenue they are seeking to generate.
Is the plan to only draw as much money away from UK energy consumers as the amount invested in (or via) GB energy, or will there be additional surplus drawn away from the private domestic sector? Either way (whatever the answer) this will be a redistribution exercise and likely a regressive redistribution exercise, since the lower the income household, the higher the electricity bill is likely to be as a proportion of income.
The answer to the question is sort of yes, GB Energy could be used to generate publicly owned revenue. However, if the investments it makes are primarily in energy infrastructure in the UK, the source of the ‘publicly owned’ revenue must be primarily UK energy consumers. Therefore, this component of GB Energy is really a redistribution exercise, and a regressive one at that!
It’s all a bit self defeating in other words. Why not simply invest in the clean energy with new money creation, remove the profit motive and truly lower costs for UK consumers? OR… Why not focus on overseas investment and therefore through a process of neo-colonialism we can have overseas energy consumers pay for our future energy system improvements. This is after all the methodology of the internationally-operating but state-owned energy companies the Labour government is aspiring to replicate - think Vattenfall, EDF, Ørsted etc.
Further macro thoughts
The word “revenue” is interesting, particularly in the context of “publicly-owned revenue”, or government revenue. The origins of the word revenue is old english adopted from old french “revenu”, which means “returned”. Why am I highlighting this? Well, the insights from MMT show us that when it comes to government finances (fiscal policy) the mainstream economists (neoclassical economists) have it backwards - it is not tax and borrow to spend (TABS), it is actually spend then tax and borrow (STAB). After all, the sovereign UK government is the only source of pounds in the economy and therefore all money in the economy must have come from the government spending new money into existence. Later, the money is returned to the government when taxes are paid - so “tax revenue” means the return of government issued money back to the government - this conforms to the old english meaning of the word revenue.
I find it tantalising that in the Great British Energy Founding Statement, Ed Milliband, Secretary of State describes the budget allocation as “new money”.
Backed by a capitalisation of £8.3 billion of new money over this Parliament, Great British Energy will work closely with industry, local authorities, communities and other public sector organisations to help accelerate Britain’s pathway to energy independence.
Ed Milliband, Secretary of State - Great British Energy Founding Statement p.3
Incidentally when taxes are paid, the money returned to the government is destroyed. After all, money is not a commodity, it is a debt, an IOU. When you return an IOU to the issuer, the IOU ceases to have any meaning and might as well be destroyed. In this regard, money is a lot like frequent flyer points - when you redeem the points they are deleted, that much is clear. It is less clear with the GB Pound and paying of taxes, but this is in fact what happens. Taxes you pay are deleted out of existence!
This is why a monetary sovereign government can’t save money. Attempts to do so, by running surpluses, merely result in a reduction of available money in the non-government sector. This forces the private domestic sector to borrow more money from banks, which creates instability in the economy, increasing the likelihood that recession or larger sudden shocks occur.
EnergyEconomicsGB-EnergyGreat-British-EnergyMMTModern-Monetary-TheoryRevenueSTABTABSSectoral-BalancesEd-Milliband