A raft of British businesses urged Chancellor John Healey to move levies off electricity bills as rising energy costs squeeze industries from chemicals to steel. On top of wholesale costs, UK consumers pay various fees on their bills to fund subsidies for renewable projects and other energy and social policies. The government recently shifted some of those fees into general taxation to ease the burden on households, and large energy users are now pushing for similar help after the conflict in the Middle East drove up fuel prices.

"Moving electricity levies from both business and household bills to government spending would immediately make energy costs more affordable and competitive," industry groups said in a letter to the chancellor that was shared with Bloomberg News. "It would also address distortions that undermine investment in electrification." The letter was signed by trade organizations across a wide swath of the economy, signaling how much of Britain’s private sector sees rising energy costs as a threat. Signatories included Energy UK, the Confederation of British Industry and the British Retail Consortium, as well as groups that represent industries such as steel, ceramics, chemicals and paper production.

The Chancellor is fully focused on easing cost pressures for families and businesses, a government spokesperson said in an emailed statement. They cited the government’s removal of VAT from electricity bills as well as an initiative to lower electricity costs for manufacturing businesses. The Labour government under former leader Keir Starmer vowed to cut household energy bills by as much as £300 ($406) a year by 2030. But since the party returned to power, bills have actually risen by around that amount. With Starmer having moved some levies into general taxation earlier this year, it could be a challenge to convince Healey to do meaningfully more.

The UK is already facing difficult spending decisions in the coming years, particularly if it wants to channel more funds to defense. But without shifting more levies, it’s unclear what options the government has to significantly reduce bills other than to hope that natural gas prices fall.