Business Groups Urge Britain’s New Prime Minister to Cut Energy Levies to Boost Economic Growth

Britain's incoming prime minister is being urged to reduce the energy levies paid by businesses as part of a broader effort to accelerate economic growth, according to a joint call issued on Tuesday by the Confederation of British Industry (CBI) and Energy UK. With former Manchester mayor Andy Burnham expected to take office at Downing Street, the two organisations warned that persistently high energy costs are weighing heavily on businesses and undermining investment across the country.

The CBI and Energy UK said that around 40 per cent of businesses have scaled back investment plans because of elevated energy prices. They noted that electricity costs faced by British firms are currently 45 per cent higher than the median level across the Group of Seven economies, placing UK businesses at a significant competitive disadvantage.

In a joint report, the organisations recommended that the government eliminate the costs associated with the Renewables Obligation and the Feed-in Tariff for all businesses. They suggested that the funding required for these programmes could instead be provided through general taxation or by establishing an Energy Transition Funding Scheme financed through either public or private sources.

The report also called for the Climate Change Levy to be removed from electricity bills issued to non-domestic customers. According to the CBI and Energy UK, implementing these measures could reduce business energy costs by as much as 20 per cent. The organisations added that further reforms would also be necessary to lower the overall cost of the energy system while supporting the wider electrification of the British economy.

Commenting on the proposals, Louise Hellem, the CBI's chief economist, said, “If ⁠we want to tackle the cost of living and invest in public services, we need stronger economic growth – and that can’t happen ⁠while firms are navigating sky-high energy bills.”

In a separate development, the Trades Union Congress called for an increase in the tax imposed on bank profits, arguing that the additional revenue could be used to reduce energy bills for the majority of households.

By fLEXI tEAM