A group of 17 manufacturers, investors, and climate groups have called on the Chancellor to move policy costs from electricity bills and into general taxation, a move they say will unlock growth, drive electrification and secure Britain’s place in the global clean economy.
In a joint letter sent to Chancellor Rachel Reeves the groups say the change would cut business energy costs by up to 15% and household bills by up to £370 per year.
The groups cite a similar change in Germany as precedent for such a move. In 2022, Germany scrapped its green power surcharge, opting to pay for renewables through a dedicated national climate fund instead. This enables the government to recover costs in a more progressive way, as policy costs currently fall disproportionately on electricity users, including lower-income households and businesses that are struggling to compete internationally.
“If the UK wants to compete for clean industry and investment, electricity prices must come down,” said Laith Whitwham, Senior Policy Advisor at E3G. “Moving legacy policy costs into general taxation is a fast, fiscally sound fix that would reduce costs, improve investor confidence, and help Britain keep pace with other countries.”
Arjan Geveke, Director of the Energy Intensive Users Group (EIUG), said: “Having policy costs on electricity prices deters electrification, increases the risk of carbon leakage, is highly regressive, and the opposite of value-for-money. Moving them to the Exchequer will free up energy bills and stimulate economic growth”.
Read the letter here