Tony Blair’s think tank has upped its challenge over the Labour government’s energy policy after a new report warned that bills need to come down by £300.
The Tony Blair Institute (TBI) has been critical of Ed Miliband’s push for net-zero policies after concerns were raised in a report by the Energy Crisis Commission.
The commission, which brings together representatives from Energy UK, the Confederation of British Industry (CBI), Citizens Advice and National Energy Action, warned that the government must tackle high electricity prices and boost insulation in the upcoming Budget.
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.
But concerns have also previously been raised that Mr Miliband’s hardline attitude against using fossil fuels in the transition is keeping energy bills high.
In a foreword to an earlier report by the TBI, Sir Tony warned that climate policy has become disconnected from “political, public, and economic reality”.
Reacting to the commission’s findings, TBI’s senior energy policy adviser Tone Langengen said: “The Energy Crisis Commission is right to say costs need to come down; the government promised to cut electricity bills by £300, but on the current path the opposite will happen. We’re in a cost-of-living crisis – families can’t afford a clean-energy plan that pushes prices up.
“But we cannot just move costs around – we need to reform the system. That’s why at TBI we’re calling for government to overhaul the electricity market to attract investment and cut bills, including through zonal pricing which would save the public up to £55bn by 2050.
“The National Energy System Operator should also be given a new mandate to monitor net zero delivery for cost effectiveness, and their control room should be AI-ready; unlocking billions and making the system more efficient.
“While we remain committed to clean power and the UK’s net zero goal, we must have cheaper, reliable energy to power growth and protect households.”
The Energy Crisis Commission called for the Budget, which will be delivered next Wednesday, to include details on how the government will reduce the gap between electricity and gas prices to drive forward the transition.
It 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.
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.”
Dhara Vyas, chief executive of Energy UK, said: “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.”
A Treasury spokesperson said: “We do not comment on budget speculation. We recognise energy costs are a significant concern for households, and this government is taking decisive action to tackle it including extending the Warm Homes Discount and funding to help upgrade thousands of low-income homes to be warmer and more energy efficient.”
