A new report from the CBI and Energy UK, with analysis from Cornwall Insight and the National Institute of Economic and Social Research (NIESR), has delivered a blueprint for growth to the incoming Prime Minister built on cutting business energy costs.

According to the second report under the organisations’ partnership, persistently high energy costs are no longer just an energy market problem for the UK – they are an anchor weighing down productivity and competitiveness across the whole economy.

With an incoming Prime Minister looking to outline their vision for the country, the report argues that action to reduce business energy costs must be an immediate priority or the UK risks putting future growth and investment in jeopardy.

Electricity prices 45% above the G7 median have put UK firms on the back foot as they look to compete with global counterparts.
Narrow government support for energy-intensive firms has left 2.7 million businesses – accounting for 90% of non-domestic electricity consumption – facing sharp increases to their cost base.
Four in ten companies are cutting investment due to high energy costs. 

To meet this challenge head-on, the CBI and Energy UK are calling on the government to work with industry to deliver a comprehensive national strategy to reduce business energy costs.

The CBI and Energy UK have worked with a taskforce of industry leaders and experts established earlier this year – including BT, Centrica, DHL, EDF, E.ON, HSBC, Jaguar Land Rover, KPMG, SSE, Tesco and Professor Tim Leunig – to develop a practical blueprint for reform that can be actioned in 2026.

If implemented in full, it is estimated that these recommendations can unlock an additional £130 billion in economic activity between 2027 and 2050:

1. Take direct action to cut electricity prices. 

Remove Renewables Obligation (RO) and Feed-in Tariff (FiT) costs for all businesses. This should be financed through one of the following options:  

Move the costs into general taxation. 
Create a publicly financed Energy Transition Funding Scheme. 
Work with the financial services sector to develop a privately financed Energy Transition Funding Scheme. 
Reform business energy taxes by taking Climate Change Levy charges off non-domestic electricity.

These actions could cut total energy costs by up to 20%, depending on the type of business, and close the competitiveness gap with international counterparts.

2. Implement reforms to reduce the cost of the energy system. 

Use the Reformed National Pricing (RNP) programme to cut balancing costs. 
Raise non-domestic Minimum Energy Efficiency Standards. 

3. Support business electrification and energy demand management. 

Launch the Business Energy Upgrade scheme for SMEs. 
Offer targeted operational expenditure discounts to incentivise electrification. 
Offer guarantees for corporate Power Purchase Agreements to drive market expansion. 

Louise Hellem, CBI Chief Economist, said: “Years of loading policy costs onto electricity bills have 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.

“With a new Prime Minister coming into office, it’s clear that reducing business energy costs must be a day-one priority. If we want to tackle the cost of living and invest in public services, we need stronger economic growth – and that can’t happen while firms are navigating sky-high energy bills.

“Reliable, affordable energy is essential for all businesses. That starts by removing policy costs from bills, reforming our energy system and shaping the market to make electrification more practical and affordable.”

The UK cannot afford to let high energy costs continue to damage business investment, reduce our international competitiveness, and worsen the cost-of-living crisis.

Energy is an essential service that underpins both daily life and economic growth. Yet years of making policy decisions with little regard to the impact on business energy users has left the UK with some of the highest industrial energy costs in the developed world. If we are serious about growth and competitiveness, it is time to address these challenges and put in place a more effective long-term approach.

Every government talks about growth, investment and rebuilding Britain’s industrial strength but we need to see immediate action. Taking policy costs from bills, making sure our energy system works better for all businesses, and making it easier for them to electrify can move us away from stagnation towards a thriving economy that stands shoulder to shoulder with our international counterparts.

With £130 billion up for grabs from our recommendations, the new Prime Minister has a ready-made blueprint to work with industry and make the UK a better place to live and work.

Dan Morris, CEO of Cornwall Insight, said: "Rising electricity bills are putting real pressure on businesses, shaping decisions on investment and how quickly they can electrify. That pressure is heightened by how difficult energy costs have become to plan for, with variability and uncertainty now almost as big a challenge as the price itself. And while wholesale markets get most of the attention, it’s rises in policy costs and network charges that are locking in price pressures through this decade and undermining businesses' ability to predict them.

"Cornwall Insight's modelling for this report provides one of the clearest pictures yet of how these costs are impacting different parts of the economy, and the data shows there is no single business experience of energy costs. A manufacturer, a data centre and a commercial site all face very different bills, depending on how and where they operate, and most are missing out on any support. Our data shows, industrial businesses that fall outside existing support schemes could see bills rise by as much as 20% by 2027, a jump that will land hardest on the sectors already competing to keep costs down.

"With a new Prime Minister set to take office, and growth and investment high on the agenda, understanding the impact of policy and network costs on businesses across different sectors will be essential. The decisions made now about sharing the costs of the energy transition will help determine whether businesses can invest, compete and electrify at the pace the country needs to grow."