July 20 2026 - 7:00am
After speculation to the contrary, Andy Burnham will reportedly not allow new North Sea oil and gas developments, continuing Britain’s dysfunctional energy policies. Extracting as much of our own oil and gas as possible should be a no-brainer: Britain will continue to consume significant quantities of oil and gas for decades, so it makes sense to produce as much as it can itself. Using imports rather than its own production means losing jobs, investment and tax revenues from the North Sea. UK production also has lower emissions than imports and improves energy security.
The wider problem is that energy in the UK is too expensive. Increasing the country’s oil and gas production would help with this at the margin, but there are bigger things that need to be done to reduce cost — particularly for electricity, which is breaking under the strain of massive renewables subsidies and the infrastructure needed to support them.
If Burnham wants to cut energy bills, the first thing he should do is abolish the UK Emissions Trading Scheme (ETS). This a tax on carbon emissions that raises the cost of generating electricity, which in turn feeds into bills. Its initial intention was to encourage a switch away from carbon-intensive generation, but now that the UK has closed all its coal power stations, it serves no purpose: gas power stations are needed when there is not enough wind and solar generation, and there is currently no realistic alternative. The ETS is therefore a pure tax that has no climate benefit.
The same applies to the Renewables Obligation, a generous legacy scheme where consumers pay to support renewable projects commissioned many years ago. Those subsidies may have been justified when the technologies were immature, but continuing to levy billions of pounds each year from consumers long after the industry has become established adds cost for no benefit.
The Government should stop subsidizing new renewables. Britons have been subsidizing wind farms since 1990, and new solar farms are actually breaking the electricity grid. Subsidizing new schemes at this point is irrational — anything that is not economic on a standalone basis has no place on the grid when consumers are struggling so much with affordability.
Burnham should also review planned grid investment. Billions of pounds are reportedly being set aside to connect increasing volumes of intermittent renewable generation, much of which would be unnecessary if other low-carbon generation, such as nuclear, were chosen instead. If renewable projects deliver genuine net benefits to consumers, they should proceed; if not, they should not. Investment should not be treated as worthwhile simply because it supports Net Zero objectives.
A similar principle should apply to existing assets. If continuing to operate a particular renewable asset imposes higher future costs on consumers than the benefits it provides, the Government should be prepared to close it. There is nothing economically rational about continuing with an inefficient policy simply because money has already been spent.
The Government should stop using energy bills as a convenient mechanism for funding wider policy objectives. The Warm Home Discount is a simple transfer of wealth between different types of energy consumers that should be administered through taxation and benefits, not through energy bills. Nor should new taxes be added, such as the proposal to pay for the BBC through a new levy on energy bills. Finally, domestic energy should no longer attract VAT, given that it is an essential service.
Burnham’s failure to support new North Sea production is disappointing. Britain needs a radical new approach to make energy affordable and have a meaningful impact on the cost of living.
