Switching from fossil fuels to electricity across all sectors of our economy from heat to transport to power, will bring huge benefits to the UK. Electrification reduces our reliance on volatile fossil fuels, delivers energy security, cost of living relief, and progress towards the UK’s net zero targets. As the Treasury finalises its upcoming Autumn Budget, electrification must be properly supported.
This briefing sets out four critical electrification priorities for MPs.
Key areas
1. Warm Homes Plan
- Reports of potential funding cuts of up to £2 billion to the Warm Homes Plan risk severely stalling home retrofits, heat pump rollout, and energy efficiency upgrades.
- Reducing home upgrade funding will leave hundreds of thousands of low-income households exposed to volatile international gas markets and trapped in cold, damp housing. Over 2,500 people died during cold weather in winter 2024/5, so this is crucial.
- Safeguarding the Boiler Upgrade Scheme and the Warm Homes Plan will reduce state spending on fuel poverty support and healthcare.
2. Electric Vehicles
- Electric vehicle (EV) adoption is expanding rapidly across the UK. However, accelerating mass adoption requires making EVs cheaper to buy, even though they are already far cheaper to run.
- Introducing a pay-per-mile road tax structure specifically targeting EVs risks undermining consumer confidence.
- The Treasury should also reduce the VAT paid on public EV charging from 20% to 5%, in line with household energy rates to not penalise people without driveways.
- The Government must maintain its commitment to the Zero Emission Vehicle (ZEV) Mandate to provide long-term certainty for the automotive sector, allow the sector to compete globally (as the majority of UK EVs are exported), and accelerate cost reduction for consumers.
3. Lowering electricity costs: Stop the Crown Estate profiteering from offshore wind generation
- In 2023, the Crown Estate introduced uncapped auctions for offshore wind developers to access the seabed around England and Wales (over which it holds a monopoly). This move generated record monopoly revenues for the Crown Estate, drastically increasing development expenses for offshore wind generators.
- Research from Oxford University shows that this extra leasing expense forces developers to raise electricity prices by 30% to 59% to recover capital. This could pass an extra £36 billion to £72 billion onto industrial and domestic energy users, adding up to £38 per year to average household electricity bills.
- The Treasury should instruct or coordinate with the Crown Estate to re-introduce fee caps or ringfence surplus leasing revenues to directly offset consumer energy bills and lower industrial electricity tariffs.
4. Lowering electricity costs: decouple electricity prices from volatile gas
- Under the UK’s wholesale electricity market, gas power sets the price for all electricity 85% of the time. Even as renewables expand, UK electricity consumers are still paying high bills set by volatile international gas prices, which spike during fossil fuel price shocks, such as the conflicts in Ukraine and the Middle East.
- The Government can prevent gas from setting the price of electricity by removing gas plants from the wholesale market and transferring them into a Strategic Reserve managed via a Regulated Asset Base (RAB) model.
- Based on 2025 gas prices, this proposal is estimated to save:
- The average UK household £65 per year
- An average of £850 for pubs and £820 for cafes
- £67 million across the iron and steel industry, £128 million for the chemicals industry, and £37 million for ceramics and other mineral sectors (such as glass and cement). These savings are essential to keeping British manufacturing competitive as it electrifies.
- This model delivers a peak net saving of £5.2 billion for all electricity consumers by 2030. Crucially, these savings increase significantly during a gas price shock, including the shock we’re experiencing right now.