If you’ve ever looked at a business electricity bill and wondered why so much of it isn’t actually “electricity,” you’re not alone. On 15 September, 123 organisations — including the CBI, MakeUK, the British Retail Consortium, UKHospitality and Energy UK — wrote jointly to the Chancellor asking him to strip policy levies off electricity bills in the Autumn Budget and fund them from general taxation instead. It’s a technical-sounding ask with a very concrete number attached: they say it could cut business electricity prices by up to 20%.
What’s actually on your electricity bill
A chunk of every business electricity bill isn’t wholesale energy cost at all — it’s policy costs, things like the Renewables Obligation and other green levies, bundled into the unit rate rather than shown as a separate tax. That’s different from, say, VAT, which at least shows up as its own line. These levies are baked into the price per kWh, which is part of why “energy costs” and “policy costs” get talked about as if they’re the same thing when they’re not.
The ask, and the number behind it
The coalition’s proposal is to move those levies off bills entirely and pay for them through general taxation instead — the same public spending they already fund, just collected differently. They argue this would cut business electricity prices by up to 20% and household bills by up to £250 a year, and point to figures showing over 40% of British businesses have already cut investment specifically because of high energy costs. Whether the Chancellor takes this up in a Budget with roughly £5bn of headroom to play with is genuinely open — this is a lobbying ask, not a confirmed policy.
What it would mean if it happens
A 20% cut to business electricity prices is a meaningful number for any business with real energy exposure — a workshop running machinery, a kitchen, a server room, cold storage. It’s worth being clear-eyed about the “if” here: this is what 123 organisations are asking for, not what’s been announced. If you’re forecasting energy costs for next year, don’t build a 20% cut into your numbers yet — but it’s a live enough proposal that it’s worth checking back around Budget day rather than assuming the status quo is locked in.
Limited company and sole trader perspectives
Sole trader: A one-woman bakery running two commercial ovens has energy as her second-biggest cost after ingredients — for her, a genuine 20% cut on the electricity portion of her bill would be the difference between absorbing next year’s flour price rise and having to pass it on.
Limited company: A small precision engineering firm with several machine tools running most of the day has been quietly modelling two scenarios for its 2027 budget — one with current energy pricing, one with the levy removed — specifically so it isn’t caught flat-footed either way once the Budget lands.
What to do now
- Don’t change your energy budgeting yet — this is a proposal, not a confirmed change.
- If energy is a significant cost line for you, it’s worth knowing this campaign exists so the Budget headline makes sense when it lands.
- Check your own bill breakdown (most suppliers will show it on request) so you know roughly how exposed you are to the policy-cost portion versus wholesale price.
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