Government must tackle high electricity prices in Budget, industry experts say

The Government must tackle high electricity prices and boost insulation in the upcoming Budget, a group of industry stakeholders has said.

The Energy Crisis Commission, which brings together representatives from Energy UK, the Confederation of British Industry (CBI), Citizens Advice and National Energy Action, welcomed the Government’s commitment to transitioning to clean energy.

But the group said the switch to electrification will stall without meaningful action on lowering bills for both households and businesses.

Electricity prices in the UK remain some of the highest in Europe after Russia’s invasion of Ukraine in 2022 sparked the energy crisis.

The commission warned on Wednesday that the UK remains critically exposed to further energy market volatility and price spikes because of its dependency on gas.

It called for the Budget, which will be delivered next week on November 26, to include details on how the Government will reduce the gap between electricity and gas prices to drive forward the transition.

The commission said the Government should consider reviewing policy costs, which help to pay for renewable energy projects and social schemes, as part of efforts to save households money.

Currently policy costs are paid for on household bills, but the group said ministers should consider shifting some of these levies away from bills and into general taxation or spreading them more evenly between gas and electricity bills.

And the Government is also being urged to publish its delayed warm homes plan, which will outline measures to boost energy efficiency upgrades such as insulation and low-carbon heating for low-income households.

The plan “must be focused on making it easy for all homes to make the upgrades and changes they need, ensuring that low-income and vulnerable households are protected and prioritised”, the commission said.

Louise Hellem, chief economist at the CBI, said: “The UK’s energy crisis remains a spectre on the cost of doing business, with highly volatile energy prices a continued drag on business investment.

“Accelerating the energy transition is vital to both national energy security and mitigating the impacts of climate change.

“It is a defining strategic economic opportunity for the UK and should be the backbone of a competitive, resilient economy in an uncertain world.

“This won’t happen unless high electricity prices are addressed.”

Gillian Cooper, director of energy at Citizens Advice, said: “With energy bills still far higher than before the crisis and millions in energy debt, Citizens Advice is bracing for another tough winter helping people heat their homes and keep the lights on.

“The Government’s expanded support this winter is welcome, but it’s not enough.

“It must cut electricity costs so people see the benefits of clean, renewable power.

“And for those struggling most, the Government should strengthen targeted help like the warm home discount and make it easier and cheaper to fix cold, draughty homes.”

Dhara Vyas, chief executive of Energy UK, said: “The Government is making the right moves for the long term and customers in the future will reap the rewards of a clean power system, stable bills and energy independence.

“Right now though, the Government also needs to take action and help those who have been facing persistently high bills for several years.

“Reducing electricity costs would both ease that burden and remove a serious barrier to the adoption of clean heat technologies.”

Adam Scorer, chief executive of National Energy Action, said: “For millions, the energy crisis was not a single, market event.

“It was a worsening of a terrible norm and confirmation that a warm home would remain a vain hope.

“Those households still face the daily reality of cold, damp homes and impossible choices.

“The energy crisis should commit us to the necessary actions that will make an affordable, warm and healthy home a reality for all, regardless of income and personal circumstance.”

The PA news agency has contacted the Treasury and the Department for Energy Security and Net Zero for comment.