Post: Businesses call for hidden electricity tax to be removed

Businesses call for hidden electricity tax to be removed

More than 120 organisations have signed a letter, co-ordinated by E3G and Energy UK, urging the government to use the upcoming Autumn Budget to remove policy levies embedded in energy bills.

The letter, published on 11 September, has attracted support from organisations spanning energy, manufacturing, retail, housing, consumer and environmental sectors, highlighting growing concern over the impact of high electricity prices on households, businesses and UK competitiveness. It notes that the UK’s energy costs are some of the highest of any developed nation, and 70% higher now than they were in 2021. It notes that this has been a significant contributor to household energy debt and caused over 40% of British businesses to cut investment.

Energy bills remain high due to high gas prices and non-fuel costs placed on bills. The conflict in the Middle East has pushed up gas prices considerably but government levies also contribute a significant proportion of the bill. According to the letter, moving levies to the Exchequer would lower business electricity prices by up to 20% and bring the total average household energy bill reduction to as much as £250 a year. This would deliver considerable economic benefits, boosting business investment and reducing inflation by 0.3 percentage points, which would save the government billions of pounds in future borrowing costs and inflation-linked spending. It would also significantly accelerate electrification of energy demand.

GridBeyond Director of Public Sector & Funded Assets, Phil Best, said:

“Moving levies off bills is the right call, but the bigger prize is unlocking the flexibility already sitting behind the meter. Demand response, storage, and smart automation that let businesses use power when it’s cheapest and cleanest. Get that right alongside levy reform, and the UK doesn’t just lower bills, it builds a grid that can actually carry the load of electrification.”