Levy Reform Machine demo

The only way the government has proven itself able to cut energy bills quickly and noticeably over the last 30 years is through energy bill levy reform - cutting or shifting taxes and levies off energy consumption. With the Iran war and the rising costs of upgrading and running the electricity grid, there will be pressure to build on the levy cuts of the Autumn 2025 Budget.
As of June 2026, the levies are almost entirely on electricity consumption. They make up about 17% of an average household electricity bill, and 20% - 25% of business bills. The levies don't just make the 'spark gap' (the unit cost difference between gas and electricity) intolerable for electrification and decarbonisation. They gum up the economics of the electricity market and drive up the costs of renewable energy for bill payers.
There's no way around it: levy reform costs the Treasury money. Three decades' worth of higgledy piggledy levy policy has built up on bills. The cost has mounted to ~£15 billion per year across households and businesses. It'll be closer to £20 billion by the next election. To lower the bills, it's either shift the costs onto the state's balance sheet over time, or fiddle with / rip up the legal contracts the levies underpin. The government is already fiddling, for instance the reindexation of Renewables Obligation and Feed-in Tariff contracts. The two main opposition parties have said they'll start ripping things up entirely if they win the next election.
In this session, we're going to be exploring an idea for fiscally responsible, flexible, transparent levy reform. Andy King (ex-OBR) and Virginia Sentance (ex-HMT) will demo a Treasury-grade model for what we'll call the 'levy reform machine'. Jack Pardoe (Octopus Energy) will then lead a session to ask for your criticism and ideas to help develop the policy further. The ultimate goals are to cut energy bills quickly, make them less socially regressive, make the grid more affordable, and promote electrification to cut oil & gas import dependency.