Burnham Faces Energy Cost Test Ahead of COP31

The government’s shift in emphasis was signalled in Chancellor John Healey’s Budget speech. “Today I’m setting a new course on energy: to get UK energy costs down in line with Europe,” he said, adding that cheaper energy was the priority and clean power key to achieving it. The stance has since been tested by Energy Secretary Miatta Fahnbulleh’s approval of the Jackdaw gas field project, and will be in focus as Burnham travels to the climate summit before pursuing an energy market deal with European leaders in Dublin.

Ministers face decisions on Rosebank, where Equinor is awaiting approval to open an oil field. Fahnbulleh and Healey have reportedly disagreed over whether further drilling fits Labour’s manifesto pledge not to issue new oil and gas licences. Labour backbenchers have spoken out against Rosebank. Louise Haigh, who enforces Burnham’s agenda in government, is expected to ease electric vehicle sales targets to help carmakers. Fahnbulleh has also said the goal of eliminating almost all fossil fuels from the power supply by 2030 could be dropped if the affordability challenge is not resolved.

The government plans to give about 10,000 energy-intensive businesses electricity discounts of up to 25 per cent from April. The support is expected to cost taxpayers billions by 2030; the government says further funding will come from aligning UK and EU carbon markets and exempting businesses from existing levies. Yet British industry remains heavily reliant on fossil fuels, and data from government analysis and international agencies indicates UK firms pay four times as much for electricity as US companies and about twice as much as European counterparts.

Energy market observers broadly favour removing levies from bills and funding subsidies through general taxation. A cross-party Commons committee led by Labour’s Bill Esterson called stripping net zero costs from electricity prices a “critical means” of reducing bills. The Institute for Fiscal Policy found taxes and policy costs accounted for more than a third of industrial electricity costs for businesses that are not energy-intensive.

The costs of weakening climate policy are also in dispute. Research by Transira Energy and Onward, backed by the Conservatives, estimated that scrapping net zero rules and taxes could save households up to £540 a year between 2030 and 2050, while warning that slower electrification could leave the economy more exposed to international gas price shocks. The Office for Budget Responsibility said in its 2025 fiscal risks report that, in a scenario with global temperatures rising by three degrees Celsius, climate damage could account for around three-fifths of the increase in public sector debt by 2074.