(Sharecast News) - Cutting business energy costs could unlock an additional £130bn in economic activity over the next two decades, according to a new report from the CBI and Energy UK, who have called on the new prime minister to implement reforms to reduce the current strain facing British businesses.
The report, which has been put together alongside Cornwall Insight and the National Institute of Economic and Social Research (NIESR), argues that persistently high energy prices are an "anchor weighing down productivity and competitiveness across the whole economy".

UK firms currently have to contend with electricity prices that are 45% above the G7 median, with 2.7m businesses facing sharp increases to their cost base. These businesses collectively account for 90% of non-domestic electricity consumption.

Ahead of Andy Burnham being officially sworn in as the next Labour leader - expected later this month - the CBI and Energy UK have called on the incoming prime minister to work with industry to deliver a new national strategy to reduce business energy costs.

The "practical blueprint for reform", if implemented in full, could deliver a £130bn boost to the economy between 2027 and 2050, the lobbies jointly announced on Tuesday.

They have called on the government to remove the Renewables Obligation (RO) and Feed-in Tariff (FiT) costs for all businesses, which the report said could be financed through general taxation, or a publicly or privately financed scheme.

Along with taking Climate Change Levy charges off non-domestic electricity, these reforms could cut total energy costs by up to 20%, the lobbies claim.

Other proposed reforms include using the Reformed National Pricing programme to cut balancing costs, and raising non-domestic Minimum Energy Efficiency Standards. 

At the same time, the government should support business electrification and energy demand management, they added.

"With a new Prime Minister coming into office, it's clear that reducing business energy costs must be a day-one priority. If we want to tackle the cost of living and invest in public services, we need stronger economic growth - and that can't happen while firms are navigating sky-high energy bills," said the CBI's chief economist Louise Hellem.

"Reliable, affordable energy is essential for all businesses. That starts by removing policy costs from bills, reforming our energy system and shaping the market to make electrification more practical and affordable."

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