Walk into any factory floor or distribution centre these days and the conversation quickly turns to the same headache: the electricity bill. According to a joint report released on 14 July, four in ten business leaders have already decided to cut investment because those costs have become unsustainable.
This is not some abstract policy debate. UK electricity prices sit 45 percent above the G7 median. Nearly 90 percent of firms have seen their energy bills rise sharply over the past three years. The figures come from a survey of 717 respondents conducted between late March and mid-April, covering 2.7 million businesses that account for the vast bulk of non-domestic electricity use. The pattern is clear enough: what began as an effort to fund renewables has hardened into a structural drag on the real economy.
The report models seven distinct business energy archetypes with help from Cornwall Insight. Its central message is that years of loading policy costs onto electricity bills have left UK firms facing some of the highest charges among major economies. At a moment when investment, electrification and global competitiveness ought to be priorities, those bills make each goal harder to reach.
Years of loading policy costs onto electricity bills has left UK businesses facing some of the highest electricity costs among the world’s biggest economies. At a time when we really need firms to invest, electrify and compete on the world stage, these costs make all three goals more difficult, representing a massive drag on economic growth.
So says Louise Hellem, chief economist at the CBI. Her assessment carries weight because it rests on data rather than rhetoric. The organisation, together with Energy UK, is not calling for an end to the energy transition. It is asking for a more honest allocation of its costs. Remove the Renewables Obligation and Feed-in Tariff levies from business bills, they argue, and finance the shortfall through general taxation or a dedicated transition fund. Reform the Climate Change Levy so it no longer penalises non-domestic electricity. Cut balancing costs via a reformed national pricing programme.
Other proposals include a Business Energy Upgrade scheme for smaller firms, targeted discounts to speed electrification, and guarantees to support corporate power purchase agreements. Taken together, the modelling suggests these steps could unlock an additional £130 billion in economic activity between 2027 and 2050. That is not a trivial sum at a time when growth feels elusive.
Dhara Vyas, chief executive of Energy UK, puts the stakes plainly. High energy costs are damaging investment, eroding competitiveness and feeding back into the cost-of-living crisis. Governments of all stripes talk about growth and industrial revival; fewer seem willing to tackle the policy choices that quietly undermine them. The incoming prime minister has been handed a ready-made blueprint. Whether it is treated as day-one priority or left on the shelf will say much about the seriousness with which Britain now approaches its productivity problem.
