Starmer claims to have cut energy bills. It’s a grotesque deceit...

[dutchman]

Shuffling money around does nothing to meaningfully help with the cost of living



The Prime Minister is busy running victory laps over a £117 drop in the energy price cap. His claim is that this reduction is thanks to “actions this Government took at the last Budget”. And to give credit where it’s due, there is an element of truth to this.

At the autumn Budget, the Chancellor Rachel Reeves announced that two policies – the Energy Company Obligation and the Renewables Obligation – would be reformed. The first, which paid for home upgrades, would be scrapped, saving households around £59 a year. The second, which charged energy companies for failing to sell enough renewable electricity, would be adjusted, with government funding picking up the tab.

Eyeballing the Government’s figures, this second policy took around £88 off the typical household’s bills. But then it added them onto taxation. And there you have it: your cost of living is magically lower.

If you feel less than impressed by this, you’re not alone. Starmer is robbing Peter to pay Paul. Actually, he’s robbing Paul to pay Paul, and warning him that he’ll need to return the money in a few years to boot: after 2029, the Renewables Obligation goes back onto household bills.

This is not a particularly convincing trick. It is not meaningfully helping with the cost of living to shuffle money from bills to taxes and back again in the pursuit of headlines. At best, it’s a redistribution that favours high energy users and penalises workers and savers. And as higher-income households tend to use more electricity, the end result is likely to be fairly even across the income distribution.

Meanwhile, the Government is being noticeably quieter about the other changes to your energy bills. Dig into Ofgem’s release explaining the components that make up the typical household bill under the price cap, and it includes an extra £66 per year to pay for improvements to energy networks. Buried in the section on net wholesale prices, it includes somewhere around £6 in higher spending on subsidies for renewable producers, and an extra £17 on capacity markets, where more reliable generators wait on standby for when the renewables cut out.

Add everything together, and a very different picture emerges. Typical household energy bills may well be falling by £117, with £88 of that “saving” actually just a redistribution from bills to taxes. But other charges are actually rising. The real benefit to households – of just £29 a year – would have disappeared entirely if wholesale energy prices (the gas or electricity that households actually consume) hadn’t fallen by around £60.

So it’s the usual story: Starmer, Reeves, and Ed Miliband are driving up costs, and claiming otherwise. If you ever lose sight of this, you can get back on track by checking what the Office for Budget Responsibility makes of the cost of environmental levies, which are expected to rise from about £14.2bn this year to £18.6bn by 2030.

For Starmer to say that he’s working to “bear down on the cost of living”, then, is a liberty too far. Moving the cost of a policy from bills to taxation doesn’t change the fact that households up and down the country will still be paying for it. And claiming credit for reducing bills when the net effect of the decisions made across the Government and regulators has been to drive them up is outright dishonest.

https://www.telegraph.co.uk/news/2026/02/26/starmer-claims-to-have-cut-energy-bills/