Industry calls for Government to prioritise reduction in electricity levies

Currently, electricity prices are four times higher than gas, making it difficult for households and businesses to switch to cleaner fuel. As such there were more than 50 signatories from energy and efficiency related industries including the Electrical Contractor's Association (ECA) to a letter addressed to the Chancellor, Rachel Reeves MP, calling for the Government to prioritise reducing electricity levies to help achieve greater economic growth. The letter states:

"We welcome reports the government is considering options to reduce taxes and levies on domestic energy bills. Energy bills remain over a third higher than they were before the gas crisis [1]. Household energy debt has reached a new record high of £4.4bn [2], and energy now accounts for nearly 5% of average household spending [3]. The government urgently needs to act to address the cost of living crisis and lower household energy bills [4].

"Energy price increases since 2022 have been predominantly driven by increases in gas prices. However, taxation and levies also artificially inflate electricity bills by around 25% [5]. As well as increasing bills, this deters investment in electrifying our economy. Electrification is crucial to lowering energy bills, and is the only option for keeping energy bills stable and low in the long-term [6, 7].

"Removing a portion of levies from electricity bills, without reducing investment in energy efficiency, would deliver an immediate, universal energy bill reduction for all UK households, as well as addressing a distortion which poses a barrier to electrification. If it is not possible to reduce both VAT and other energy levies in the same budget, we urge you to prioritise reducing the levy burden on electricity bills, rather than delivering a VAT reduction split more thinly across electricity and gas.

"Prioritising electricity bill reductions, rather than reductions divided between electricity and gas, would:

• Deliver greater benefits for a larger number of households (as 100% of households use electricity whereas only ~70% of households use mains gas)
• Deliver greater benefits to electrically-heated households, who are twice as likely as other households to experience fuel poverty, and
• Have a greater impact on economic growth, decarbonisation and energy security by incentivising electrification.

"Levies on electricity are a handbrake on electrification, and an unfair burden disproportionately felt by households least able to bear them. We urge the government to prioritise the reduction of levies from electricity bills as a critical step in reducing energy bills, fighting fuel poverty and delivering greater economic growth."

Andrew Eldred, Deputy CEO at ECA, said:

“ECA has long advocated for the reform of levies on electricity by rebalancing of taxation between electricity and gas. In Britain we are paying some of the highest electricity prices in the world, slowing down the adoption of electrification in heat and transport.

“ECA recently held a Parliamentary roundtable event on our Blueprint for Electrification report, which is a practical roadmap for delivering a fully electrified, low-carbon economy. The Blueprint's strength is in bringing together perspectives from all aspects of the electrical supply chain, and this unique perspective was reflected around the table. Attendees were in agreement that if we want to accelerate electrification and reach Clean Power 2030, we must first tackle the high cost of electricity. We hope that the Autumn Budget will provide a way forward on this.”

This article appears on the ECA news and blogsite as "ECA calls for Government to prioritise reduction in electricity levies" dated 12 November 2025. The letter with full list of signatories and references can be found here.

--ECA

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[edit] References

[1] - EnergyUK (2025). Energy UK explains: October 2025 price cap: Energy UK Explains: October 2025 price cap - Energy UK

[2] Ofgem (2025). Debt and arrears indicators: Debt and arrears indicators | Ofgem

[3] - ONS (2025). Family spending in the UK: April 2021 to March 2022 Family spending in the UK - Office for National Statistics

[4] - House of Commons Energy Security & Net Zero Committee (2025). Tackling the energy cost crisis: Tackling the cost of the energy crisis

[5] - E3G based on analysis by Baringa.

[6] - E3G (2025). The UK’s clean power mission: Delivering the prize: The UK's clean power mission: Delivering the prize - E3G

[7] - E3G (2025). Heat pumps have the potential to halve UK heating bills: Heat pumps have the potential to halve UK heating bills - E3G

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