The UK’s leading business and energy trade bodies have come together to warn that persistently high business energy costs are threatening the UK’s global competitiveness, dampening investment plans and putting the brakes on the country’s growth ambitions.
A new joint report from Energy UK and the CBI is calling on the Government to deliver a robust national strategy to cut business energy costs – moving beyond short-term crisis responses and setting a clear path to a more affordable and sustainable energy future for businesses across the country.
The report, Cutting Business Energy Costs: The case for action, sets out the impact on the competitiveness of British businesses as a result of some of the highest energy costs among developed economies, which can include curtailing investment plans and wider consequences like higher prices for consumers that increase cost of living pressures.
The paper also lays the foundations for a further programme of policy and economic analysis, which the CBI and Energy UK are jointly carrying out, to examine how rising energy costs are influencing future investment decisions in the UK, assess funding models for essential energy infrastructure, and explore how government can reshape energy policy to better support both key industrial sectors and the everyday economy. This research will be driven by a taskforce of experts – including energy, industry and academic leaders – who can draw on decades of industry experience. A second report setting out these findings and potential solutions will be published in the spring.
Dhara Vyas, Chief Executive of Energy UK, said: “Energy UK is increasingly concerned about the consequences of high energy costs for businesses. Working in partnership with the CBI, it’s crucial that we build on our shared commitment to proposing solutions that will tackle this issue.
“Energy costs persistently above those faced by their counterparts in other countries, harm the competitiveness of UK businesses, prevent them investing in the future – including in the switch to clean energy – and can contribute to businesses having to cut back their operations.
“Along with the wider consequences for economic growth, consumer costs and inflation, high prices risk undermining our shared ambitions. The Government has stepped in to help with household energy costs but any support for businesses so far has been limited.
“Investment in our energy security and infrastructure is vital for the country’s future, including our businesses, but we need a comprehensive review of how these costs are being met so they don’t work against what we all want to see.”
Louise Hellem, Chief Economist of the CBI, said: “Developing a clear national strategy for business energy costs is about far more than just helping struggling firms to pay down sky high bills – it’s the very foundation of the country’s growth mission.
“To their credit, the Government has recognised the scale and importance of the issue. But we know we must go further and faster to deliver meaningful solutions. The modern industrial strategy and the British Industrial Competitiveness scheme represent a welcome start, but in a world where energy costs increasingly determine global competitiveness, the UK simply cannot afford to lose focus or momentum.
“The industries that will build, operate, and supply our clean energy system are among the most significant drivers of future productivity, investment, and skilled jobs. If growth is the goal, then success in clean energy and cutting business energy costs will also be needed to power advanced manufacturing, defence and digital, alongside many foundational sectors.
“By coming together as leading voices for energy and industry, we are modelling the kind of coordination we believe Government must adopt, developing true whole systems thinking to shape the next generation of energy and industrial policy.”
