Retailers have urged John Healey to slash green policy costs from energy bills, warning that their electricity costs are set to soar by £440m this year.
The British Retail Consortium (BRC) – which represents top retailers including Tesco, Sainsbury’s and Marks & Spencer – has warned that rising “policy costs” on energy bills will inevitably push up prices for shoppers.
The Chancellor “must take immediate action to reduce the plethora of policy levies” pushing up energy costs for high street firms,” BRC chief executive Helen Dickinson said.
The electricity costs faced by the UK’s retailers are set to rise from £2.72bn last year to £3.16bn this year, according to the industry body’s research.
The BRC said that most of this increase is down to charges levied by the government, rather than the global rise in energy prices caused by the Iran war, which now make up two-thirds of retailer’s electricity bills.
Transmission Network Use of System charges, which are levied to fund construction and repairs of the electricity grid, are set to rise by 72 per cent, adding £200m to bills alone.
Policy costs levied on retailers’ energy bills include the renewables obligation, which is charged to pay for large-scale electricity generation projects. This levy is set to rise by 2.5 per cent to £646m this year.
Businesses are also subject to the climate change levy, which is meant to encourage firms to be more energy efficient. This is on track to increase by 2.2 per cent to £151.7m.
Retail is one of the UK’s most energy-intensive industries and it uses electricity for 90 per cent of its energy needs, according to the trade body.
The BRC’s Dickinson said: “Retailers’ energy bills continue to push up the price of everyday essentials for shoppers everywhere.”
Significant cuts to policy charges on electricity bills would “ease pressure on retailers, giving them breathing space to invest in keeping prices down for households and keeping people in jobs,” she added.
Retailers have urged the government to take action on a range of costs at next month’s Budget, including employment costs and business rates.
Department store chain John Lewis has warned the Chancellor against a “terrible” business rates raid on big retailers while grocer and funeral provider Co-op blamed Labour’s national insurance hikes for recent job cuts.
A government spokesperson said: “The Chancellor is fully focused on giving families and businesses breathing space and helping ease cost pressures. That’s why we have removed VAT from electricity bills and are reducing electricity costs by up to 25% for more than 10,000 manufacturing businesses through our British Industrial Competitiveness Scheme.”
By City AM
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