We have entered the Age of Electricity

New Statesman​

a day ago

Image:Like it or not, we're entering a new 'Age of Electricity', one which promises greater self-reliance amid geopolitical tensions, and a cheaper, upgraded future. But the central challenge facing Britain's electrification push isn't grid capacity or renewables rollout. It's cost. Specifically, how we charge for electricity – and how that system is actively making things worse.
Labour's pledge to cut household energy bills by £300 a year this parliament grabbed the headlines but has fast become a political headache. The instinct is sound: UK energy bills are among the highest in Europe. But how you achieve that reduction is unclear, and the timeline implausible. Critics of clean energy are using this to go on the attack, blaming our high bills on renewables, Ed Miliband, and all manner of straw men. But the public are listening. With energy bills topping cost-of-living concerns, a perceived failure to deliver could be disastrous.
We absolutely do need to build every last gigawatt of low-carbon power we can. But supply alone won't win the race. Without reforming the way we price electricity, demand won't keep up. The problem isn't the mission; it's the way the UK's energy bills are structured. And if that stays broken, Labour's clean energy vision risks unravelling.
The short-term problem: unrealistic promises play into Reform's hands
The public expects change – and when it doesn't arrive, they remember. In the Runcorn by-election, Reform's campaign persistently reminded voters of the government's £300 energy bill reduction pledge, casting it as emblematic of Labour's failure to deliver on cost-of-living promises. 'Can you afford to vote Labour?' is a slogan that will resonate as long as bills are high. The perception that electricity is expensive, and that clean power is to blame, is starting to stick.
Energy bills are becoming shorthand for something deeper: the sense that Westminster doesn't understand – or can't – fix the pressures facing ordinary households. This is dangerous ground for any government to tread. In practice, a £300 bill reduction by 2030 is close to impossible. Structural reform of the energy system will take longer than five years to reach the average household. But the public is unprepared to wait. As long as the £300 target remains in the consciousness of the electorate, it will carry political cost.
The most effective lever Labour has
If rapid bill reductions are out of reach, what should the government do? There is a solution, but it requires honesty, not overpromising. Ministers need to be brave and make the case that reform will take time, that meaningful change beats quick fixes that could backfire. If (and when) they do, they only damage the wider mission.
The way we charge energy bills is a huge problem. Electricity bills carry the weight of clean energy subsidies, fuel poverty schemes, and legacy system costs, making them artificially high. Gas – still the primary heat source for UK homes – bears a far smaller burden, making it artificially cheap. But because wholesale gas prices will set the price of electricity for some time to come, high gas prices drive up all energy bills – even for homes using solar panels, heat pumps, or other electric solutions. The result: electricity, the very thing we need more of, is more expensive than it should be.
Subscribe to The New Statesman today from only £8.99 per month Subscribe
And the system is regressive. Everyone pays the same levies, regardless of their income. With public trust in government so low, sneaking levies onto bills is a one-way ticket to the 'they aren't governing for me' mentality that has set in across the nation. What's worse, people don't even know it's happening, and when they find out, they feel robbed. Robbed by government, by energy firms, let down by a system they believe is stacked against them. Tweaking around the edges won't fix this. Nor will it do anything for public trust.
While the energy sector is mired in a needlessly messy debate over zonal pricing, policy cost rebalancing is an oasis of consensus. Rebalancing means shifting those policy costs away from electricity and distributing them more fairly – either across gas bills or into general taxation. Rebalancing won't break the gas link entirely, but it will help to level the playing field, making electrified heat and transport more affordable.
More to the point, it is the best way for government to lower energy bills – by up to £400 for households already on electric heating, who today are more likely to be in fuel poverty. Done with the right support for gas users to avoid adverse effects, this is as close as policy gets to a silver bullet. Cheaper electricity drives demand. Demand drives up competition and drives down costs. The economic logic is simple.
Why it matters
If we want to ditch fossil fuels, electricity must be competitively priced. The current system guarantees the opposite. Unless the government fixes it, no amount of clean power investment will translate into truly affordable bills.
This isn't just about the long term. Without rebalancing, Labour has little hope of delivering on its energy bill pledge. Even worse, new costs – for carbon capture, new nuclear, network costs, grid upgrades, and larger CfDs – are coming online. They too will be loaded onto electricity bills. Gains made elsewhere will be quietly eroded, just in time for the 2029 election. The public won't blame international markets; they will blame the government.
Rebalancing alone won't deliver £300 savings for everyone. But it is the single most effective medium-term lever available. Combined with targeted support for gas users and the fuel poor, it would enable a smoother transition to low-carbon heating. The alternative? A worst-of-all-worlds compromise like the proposed 'Clean Heat Subsidy' risks exactly the kind of two-tier energy system which Labour has pledged to avoid: one in which the wealthier enjoy subsidised heat pumps and electric vehicles, while everyone else is stuck paying for a legacy gas system they can't afford to escape.
This isn't a technical argument about net zero. It's about cutting bills, upgrading homes, and insulating the UK economy from global gas shocks. Electrification is inevitable. Rebalancing is how we make it affordable.
The politics of timing
But timing is everything. Today, policy costs are hidden in plain sight – loaded onto bills through a tangle of legacy levies. The result is a regressive system that charges consumers through the backdoor, opaque, unequal, and unfair.
Public frustration is growing. This is fertile ground for populist opposition and makes bill reform urgent.
There is a narrow window to get this right. Some of the older levies begin to fall away from 2027-2028. But others – backing new infrastructure – are just ramping up. If no change is made, these will simply add to bills, offsetting progress elsewhere. And unlike global gas prices, these are policy choices. Labour won't be able to pass the blame.
If Labour is serious about electrifying and cutting costs, about cost-of-living relief, and about restoring public trust, it must deliver change. Change means addressing how energy bills are charged. Rebalancing is not optional. It's the foundation of a fairer system, and the clearest route to delivering on promises made.
Anything less is just tinkering. What's needed is clarity, courage, and a willingness to break with the orthodoxy that is failing consumers and holding Britain back.
Related