The UK is in the middle of a precipitous decline in industrial capacity that is the result of a combination of policies to embrace globalisation with an attempt to provide global leadership in controlling environmental pollution. The resulting high prices for energy, both for domestic and industrial use, are blocking reforms and weakening sovereignty.
Adherence to a market mantra has boxed the country into a corner: the UK now has the highest energy prices of any industrialised nation and dishonest pollution accounting. Energy is the master resource, domestically and commercially. Access to reliable energy is of such importance to a country that the security of supply cannot be priced in a market. As we have found in recent crises, the government has had to step in to protect energy access when supply chains falter or market prices rise substantially. Building a national energy system to secure the livelihoods of millions of citizens requires the absorption of lumpy investment costs that distort consumption costs if applied to bills.
Consumers, be they residential or business, have no influence over national objectives funded via levies on their bills that apply irrespective of supplier choice or consumption behaviour. Attaching those costs to bills undemocratically has fuelled populist narratives. Direct democratic accountability is the antidote because decision-makers bear the consequences and costs of their choices.
Together, the Universal Energy Service, GB Energy Network, and Energy for the Future direct £18.5 billion (0.7% of GDP) of funding to the modernisation and security of the UK’s energy system.
System Costs
In practice, this means paying for energy system transition costs collectively, as these need to be completed in any case, regardless of consumption choices. Upscaling the grid while maintaining backup capacity to accommodate intermittency is a collective cost that is more fairly and accurately paid for progressively as a nation. Centralising those costs allows for strategic planning. Removing them from bills allows market forces to work directly on consumption and incentivise demand response. The programme directs £18.5 billion a year towards funding the energy system transition, acknowledging that the final costs will need more investment than that.
Relocating a cost to the public account is a means, not an end. The point of relocation is to consolidate a diffuse and unaccountable cost in a single place where an accountable body is both able and motivated to drive it down, and from which the cost can be assigned to those whose choices create it.
GB Energy Network
Responsible strategy for industry
The GB Energy Network removes transmission network charges from industrial and commercial electricity bills while simultaneously reconstituting National Energy System Operator (NESO) as a statutory public body accountable to Parliament, rather than regulated by Ofgem.
This intervention eliminates the single largest non-wholesale fixed charge on business energy bills, so improving price responsiveness by making pricing more substantially based on the marginal generation cost. The budget for this policy is £2.5 billion a year (2025 prices).
Combined with the Universal Energy Service, the programme directs £10.2 billion to energy network operators. This covers the full cost of domestic energy networks and industrial transmission, while preserving the locational pricing signals that incentivise efficient generation siting.
The result: long-term policy set democratically, funding requirements determined by the independent regulator, and payment transmitted through taxation. Within that settlement, NESO's overriding duty is to secure firm power at least whole-system cost, and to place the costs of intermittency on those who create them rather than on every bill alike.
Intermittency costs
Moving network and system costs to national authority concentrates the decision and its cost in one accountable place. That is the precondition: only a cost that is consolidated, measured and publicly owned can be driven to best value and can be charged, in time, to those who generate it. While the cost sits diffused across millions of bills, embedded in fixed contracts, and recovered through a regulator at arm's length from democratic control, no actor has both the standing and the motive to confront it. Consolidation creates that actor. The safeguard is that consolidation creates a body now accountable for the cost, and mandated to bear down on it. New capacity needs to be contracted on a basis that the costs of intermittency and security are placed on those who cause them. The system-cost funding carried on the public account should be a declining, transitional liability. Held to those conditions, this relocation is the first move toward a system that prices its own costs honestly.
Energy for the Future
£7 billion a year for our future energy security
Using mineral energy to heat the least energy-efficient housing in western Europe is one of the greatest economic and environmental challenges the UK faces. We need heat at night during the winter which makes the challenge even greater.
Peak scarcity is the target we need to focus on: that week, or even two, in January when it’s cold, cloudy, and windless. It won’t happen often, but when it does, we need to be much better prepared for it than we are today. Today, we still have fossil gas piped to 90% of homes and gas-powered plants sitting ready on the grid. But in 20 or 30 years we should aim to have phased out that infrastructure. Current government-backed schemes have ambitions to upgrade only about 10% of homes by 2030.
To tackle this the UK needs a rapid rollout out of low cost, easy to deploy, heating and cooling solutions, coupled with the smartest grid we can build and local energy storage. Demand management will be the key to adapting to the realities of a grid dependent mostly on wind and batteries for supply.
Energy for the Future is an ongoing programme to electrify heating in the housing stock we have, not the one we wish we had. Many British homes were not built to become hermetically sealed, heat efficient eco-homes and will not get to that standard, or be replaced, this century. A heat pump for every home to replace every ‘trusty combi’ is an aspiration, not a plan. But there are simple electric heating solutions that can make a difference in any house, and this policy funds those at scale. This is the largest element in the Energy for the Future policy, scaling up to reach 1.2 million homes per year, prioritised by vulnerability, by the end of the parliament. That’s ten times larger than the Boiler Upgrade Scheme.
Universal Energy Service
The Universal Energy Service is the household complement of these policies. The network portion of energy costs, estimated at £9 billion a year, is funded from general taxation. This removes standing charges and levies from houehold bills.