Prime Minister Andy Burnham will arrive at Downing Street next week with a clear focus on business energy costs, which currently sit 45 percent above the average of G7 economies. The issue is framed as a major economic anchor that hampers growth and investment. The new government is expected to tackle this problem from the outset.
A joint report from industry groups argues that removing a suite of green levies from commercial electricity bills could cut costs by one‑fifth and generate an estimated £130 billion boost to the economy by 2050. The analysis, compiled with input from research institutions, highlights the potential savings and the broader economic impact of a lower energy burden.
Small and medium‑sized enterprises—particularly retailers, food and drink producers, and hospitality operators—stand to gain the most from such reforms. These firms, which have limited capacity to hedge against price spikes, have already expressed concern about the financial implications of the incoming administration.
High electricity prices have long placed British businesses at a competitive disadvantage, curbing investment and contributing to sluggish productivity growth since the 2008 financial crisis. Recent geopolitical tensions have exacerbated the problem, as the country’s heavy reliance on imported gas has pushed factory costs to levels not seen since Black Wednesday.
The report accuses successive administrations of shifting the cost of the net‑zero transition onto electricity bills for businesses. It recommends scrapping a long‑standing renewables obligation and eliminating a two‑decade‑old levy on electricity generated outside the United Kingdom.
Revenue lost from these levies would, according to the proposal, be replaced through general taxation or a dedicated public fund. The aim is to reduce the direct financial burden on companies while maintaining broader climate objectives.
Industry leaders describe energy as a foundational service that underpins daily life and economic expansion. They argue that policy decisions over the past decade have left the UK with some of the highest industrial energy costs among developed nations.
Reducing business energy costs is positioned as a priority for the new administration, with the expectation that it will strengthen economic growth and help address the cost of living. The narrative stresses that firms cannot thrive while navigating excessively high energy bills.
The choice of a new chancellor will be crucial. A candidate with a strong record on accelerating the move away from fossil fuels may clash with business interests that feel the net‑zero transition has been overly burdensome.
Burnham’s agenda includes reindustrialising the economy, yet high electricity prices threaten to undermine that goal. One in four manufacturers are already relocating production or considering it, underscoring the urgency of the issue.
The outcome of the first budget and the appointment of key ministers will shape the direction of energy policy and the future competitiveness of British industry.
