Executive Summary

• More than 120 organisations, described as an ‘unprecedented’ business coalition, have called to take levies off electricity to lower business prices and bolster electrification of energy demand
• Current discounts, such as a recently announced VAT cut on domestic electricity and details in last year’s Budget, are seen as short-lived by the coalition
• The group includes consumer bodies and representatives from retail, hospitality and technology

More than 120 organisations across industry, consumer groups and trade associations, have sent a joint letter to the Chancellor calling for all taxes to be removed from electricity.

Taking levies off electricity could lower business electricity prices by 20% and save households a further £100 per year, according to the letter, which has been coordinated by E3G and Energy UK and co-authored by the former’s Electricity Bills Taskforce.

The Prime Minister announced a VAT cut on domestic electricity in his first week in office – yet the two groups describe this as ‘short-lived’ respite, with the measure set to end in April. While a more substantive electricity discount was announced in last year’s Budget, this is likewise set to expire in 2029.

Existing and incoming business electricity price discounts are ‘limited to a small set of industrial and manufacturing firms, who greatly need the support but only account for 10% of non-domestic electricity consumption and less than 1% of the total number of companies’, the companies add.

Alongside lowering business electricity prices, the organisations argue that moving levies to the Exchequer will ‘significantly’ accelerate electrification of energy demand.

“High electricity prices hurt all of us. By taking levies off the bill, the government can show it is serious about tackling fuel poverty and the cost-of-living crisis, growing the economy, and bringing down inflation,” said Dhara Vyas, chief executive at EnergyUK. “Cheaper electricity would have an outsized impact across the economy, encouraging the switch to electric heating, transport and industry and allowing households and businesses across the UK to feel the benefit of the successful rollout of clean power.”

Signatories include the CBI, Which?, AgeUK, Nationwide, the Co-op, the British Beer and Pub Association, UKHospitality, British Retail Consortium, MakeUK, techUK, LogisticsUK, and Community Union.

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