The head of a major business lobby group is warning that energy bills in the UK are an “anchor” on private sector ambitions, exacerbating the effects of an annual £24bn burden from government costs.
CBI boss Rain Newton-Smith was to tell the body’s annual business dinner in London that a “serious” plan was needed to address the energy issue, arguing they were holding back investment and the country’s competitiveness.
A reliance on natural gas has meant that both households and businesses have been exposed to volatile prices since Russia’s invasion of Ukraine.
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The CBI says UK companies pay 50% more for their energy than counterparts in France and Germany – and four times more than comparable operators in the US and Canada.
Ms Newton-Smith was to tell her audience of business leaders and politicians that 40% of UK firms were holding back on investment due to punitive energy costs alone.
She argued they were on top of an estimated extra £24bn a year in tax and wage hikes imposed by government.
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They included three increases to minimum pay rates since the 2023/24 financial year and rises to employer national insurance contributions which came into force in April.
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The CBI said Ms Newton-Smith will say: “Business is now straining under £24 billion in extra costs per year.
“That’s more than the cost of Crossrail. More than the Home Office budget – on business, every year.”
She will add: “With costs running so high, there is one issue we absolutely must tackle.
“Without it, any industrial strategy, any serious plan for economic security will fall flat on its face. Energy.”
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She will say the rising cost of energy “isn’t just a cost issue”.
“It’s a jobs issue. An investment issue. A security issue.
“Because how can UK business compete with one hand tied behind its back – and the other straining to keep the lights on?
“This is an anchor on our ambition. A crack in our economic security. And it must be fixed.”
The CBI’s suggestions include removing policy costs from electricity bills and a focus on low-carbon energy to help achieve economic security.
The latter wish has formed the centrepiece of the Labour government’s approach, arguing that a push for renewable energy is a key pathway to bring down bills, emissions and grow the economy at the same time.
A government spokesperson said: “Through our sprint to clean power, we will get off the rollercoaster of fossil fuel markets – protecting business and household finances with clean, homegrown energy that we control.
“We are already bringing energy costs for key UK industries closer in line with other major economies through the British industry supercharger – saving businesses £5 billion over the next 10 years.”
