Ed Davey sets out plan to halve energy bills in a decade and takes on Farage’s fossil fuel myths

EMBARGO: 22.30 Tuesday 15 July

• Liberal Democrat Leader gives major economic speech at IPPR setting out new plan to slash energy bills
• Ed Davey says “we have got to break the link between gas prices and electricity costs” so people get the benefits of cheap, clean power
• Speech takes on Farage and Badenoch’s myths on renewables and warns tying Britain to fossil fuels will only benefit dictators like Putin

In a major speech on the economy today [Wednesday], Liberal Democrat Leader Ed Davey will set out his party’s plan to halve energy bills for a typical household by 2035.

Speaking in Westminster at an event organised by the Institute for Public Policy Research (IPPR), he will set out a plan to dramatically slash bills for families and businesses still struggling through a cost-of-living crisis.

The Liberal Democrat Leader will blast Nigel Farage and Kemi Badenoch for peddling myths about renewables and wanting to tie the UK to expensive fossil fuels, which he says “would only benefit foreign dictators like Vladimir Putin”. He will call for “a Liberal Democrat energy policy in service of the British people, not a Nigel Farage energy policy in service of Vladimir Putin”.

Ed Davey will set out a plan to break the link between gas prices and electricity costs, so people get the benefits of cheap, clean power. As well as accelerating investment in cheap renewable power and home insulation, the plan would move older expensive renewable projects to cheaper Contracts for Difference – which were pioneered by Ed Davey when he was Energy Secretary. Experts have estimated that this move alone could cut bills by around £200 a year for a typical household.

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On his party’s plan to cut energy bills in half over the next decade, Ed Davey is expected to say:

“After nearly a decade of criminally negligent energy policies under the Conservatives, that pushed up everyone’s bills, I believe the right policies now could cut energy bills in half – at least – within ten years.

“That should be the goal. Nothing less. A Liberal Democrat energy policy in service of the British people. Not a Nigel Farage energy policy in service of Vladimir Putin.”

On the sky-high bills facing families and businesses, Ed Davey is expected to say:

“Families and pensioners are being clobbered with bills that are still more than £50 a month higher than they were five years ago. So many people, who were already struggling to make ends meet, having to find an extra £50 a month – just to keep the lights on, or keep their homes warm this winter.

“And businesses are suffering too. Even with the welcome extra help promised in the new Industrial Strategy, parts of British industry will continue to face some of the highest electricity prices in the OECD. We have to get those prices down – to boost living standards and grow our economy.”

Addressing the myths peddled by the likes of Farage and Badenoch, he is expected say:

“The narrative – seized upon by Nigel Farage and Kemi Badenoch – says the reason energy bills are so high is that we’re investing too much in renewable power. And if we just stopped that investment – and relied more on oil and gas instead – bills would magically come down for everyone.

“The experience of record high gas prices in recent years shows that’s not true. And even when gas prices are softer, the long history of volatility in fossil fuel prices means it’s only a matter of time before high prices return. So we know that tying ourselves ever more to fossil fuels would only benefit foreign dictators like Vladimir Putin – which is probably why Farage is so keen on it.

“But refusing to engage hasn’t stopped his myths from spreading, from gaining traction in the new world of fake news. So we must change that.”

On breaking the link between gas prices and electricity costs, Ed Davey is expected to say:

“People are currently paying too much for renewable energy. But not for the reasons Nigel Farage would have you believe. Because generating electricity from solar or wind is now significantly cheaper than gas – even when you factor in extra system costs for back-up power when the wind isn’t blowing or the sun isn’t shining.

“But people aren’t seeing the benefit of cheap renewable power, because wholesale electricity prices are still tied to the price of gas. 97% of the time in 2021, the cost of electricity was set by the price of gas.

“And what does that mean for families, pensioners and businesses? It means we’re all paying that higher gas price in our bills, even though most of the energy we’re using comes from much cheaper sources. Not only is that manifestly unfair, but it is also undermining public support for the investment we need in renewable power.

“So we have got to break the link between gas prices and electricity costs. It might be difficult, but we have to do it. We can’t afford not to. Not when the price is Nigel Farage.”

On switching to new renewable energy contracts that cut bills for households, Ed Davey is expected to say:

“If all renewables were on Contracts for Difference, the electricity market would be a lot fairer and people would see the benefits of cheap renewables in their bills when gas prices are high. The problem is, only about 15% of renewable power is generated under Contracts for Difference.

“The rest is still governed by the old Renewables Obligation Certificates scheme introduced by the last Labour Government all the way back in 2002 – when ministers didn’t have the foresight to realise that renewable power would get so much cheaper over the next two decades. Unlike Contracts for Difference, companies with ROCs get paid the wholesale price – in other words, the price of gas – with a subsidy on top. Subsidies paid through levies on our energy bills – costing a typical household around £90 a year.

“It shouldn’t be this way, and it doesn’t have to be any longer. The Government should start today a rapid process of moving all those old ROC renewable projects onto new Contracts for Difference. It’s an idea from academics at the UK Energy Research Centre that they call “pot zero”. And in 2022 they estimated that it could save around £15 billion a year – not only encouraging the end of those Renewable Obligation Certificate levies, but in the process cutting the typical household energy bill by more than £200.”

ENDS

Notes to Editor:

Ed Davey will give a speech at an event in Westminster organised by the IPPR at 4pm Wednesday 16 July. To attend, please email press@libdems.org.uk