Industry bodies call on Burnham to bring down energy bills to fire up growth
Andy Burnham’s government must slash green levies on companies’ energy bills and bring forward support for energy-intensive industries if it wants to fire up Britain’s economy and win over a sceptical private sector, two of Britain’s largest industry bodies have said.
In a joint report published today, the CBI and Energy UK called on the incoming Prime Minister to make lowering business energy costs “an immediate priority” or risk jeopardising economic activity and investment.
Corporate electricity prices in Britain are 45 per cent higher than the G7 average, which has led as many as four in 10 firms having to cut back on investment in order to foot their spiralling energy bills.
Part of the sky-high cost is down to Britain’s outsized reliance on volatile oil and gas markets, the price of which fluctuates heavily based on geopolitical events and external factors. But roughly a fifth of what a standard business pays for their electricity is now the result of so-called policy costs, which the government adds to customer bills to help fund net-zero investment.
Energy shake-up could provide £130bn boost to economy
As part of what they have billed as their “blueprint for growth”, the CBI called on the new government to shift those costs into general taxation or pay for them via a privately financed Energy Transition Funding Scheme.
Louise Hellem, chief economist at the CBI, said loading policy costs onto firms’ electricity bills had “left UK businesses facing some of the highest electricity costs among the world’s biggest economies”.
“Reliable, affordable energy is essential for all businesses,” she added. “That starts by removing policy costs from bills, reforming our energy system and shaping the market to make electrification more practical and affordable.”
Authors said the blueprint, which was developed in collaboration with energy consultancy Cornwall Insights, could provide a £130bn boost to Britain’s spluttering economy. Other proposals included rolling out a programme to help companies accelerate their electrification plans and widen and bring forward support for energy-intensive companies.
The government has already announced a package to help minimise the damage high electricity prices pose to businesses that require large amounts of energy to operate. As many as 10,000 manufacturers in sectors like steel and carmaking will benefit from a roughly 25 per cent discount to their bills.
Business secretary Peter Kyle said the move was evidence the government would “always do what’s needed to support [businesses] and ensure Britain’s resilience”.
But the measure will not be introduced until April 2027, prompting several business heavyweights – including British Chambers of Commerce president Andy Haldane as well as the CBI and Energy UK – to call on ministers to bring the date forward.