Fidelity Energy CEO on what Burnham’s energy priorities mean for UK businesses

06 Jul Fidelity Energy CEO on what Burnham’s energy priorities mean for UK businesses

Labour leadership nominations open on 9 July, with Andy Burnham currently the only candidate standing to replace Keir Starmer as Prime Minister. If no rival comes forward, Burnham could enter Downing Street as early as 20 July. For UK businesses managing energy contracts in a market already shaped by the Strait of Hormuz peace deal, a rising generator levy and a £2bn cut to DESNZ announced yesterday, the question of what a Burnham premiership means for energy policy is an immediate and practical one, not a distant political abstraction.

The broad direction of UK energy policy is unlikely to shift dramatically. The Energy Independence Bill, designed to accelerate renewables and nuclear power, reduce reliance on imported fossil fuels and reform electricity pricing, is already wired into Labour’s economic programme and an incoming prime minister would face significant disruption costs from reversing it. Burnham has previously expressed support for Labour’s Clean Power 2030 agenda and is widely expected to back Great British Energy. But continuity in direction does not mean continuity in emphasis, and three specific areas are worth watching closely.

Green levies: the signal businesses have been waiting for

The most commercially significant commitment Burnham has made on energy is his stated support for removing green levies from electricity bills and funding them through general taxation instead. In his Makerfield victory speech, he was explicit: “We do need to bring down water bills, energy bills, rail fares, just as we brought down bus fares in Greater Manchester”^[5]. For UK businesses, non-commodity charges, which include the green levies that fund renewable generation subsidies, currently make up well over 60% of a typical energy bill. If Burnham follows through on moving those levies to general taxation, the structural composition of business energy bills changes materially.

The critical uncertainty is who benefits and by how much. Burnham’s public messaging has focused primarily on household bills rather than business energy costs, and the detail of how any levy reform would be structured across domestic and commercial customers remains entirely unspecified^[4]. Businesses should treat this as a possibility to watch rather than a commitment to plan around.

John Haw, CEO of UK energy procurement firm Fidelity Energy, said: “The green levy question is the one that could genuinely move the dial on business energy bills if it happens. Well over 60% of what businesses pay is non-commodity charges, and if a chunk of that moves to general taxation, that’s a structural change rather than a marginal one. But the details don’t exist yet, and businesses that start making procurement decisions based on a policy that hasn’t been designed, let alone legislated, are taking a risk they don’t need to take. Watch it, but don’t bet on it.”

Public control: what the Manchester model means for energy investment

Burnham has repeatedly advocated bringing energy companies under “stronger public control”, though he has been careful to distinguish this from full nationalisation, pointing instead to the Greater Manchester bus franchise model where the public sector sets direction and standards while private operators deliver within that framework^[6]. Applied to energy, this would represent a significant shift in how generation and grid infrastructure are governed, without necessarily requiring the upfront capital cost of outright public ownership.

For businesses, the more immediate question is what a move towards stronger public control means for the investment environment. Private capital has been the primary driver of UK renewable deployment to date, and the terms on which that capital is attracted, including contract certainty, regulatory stability and returns, are sensitive to signals about the government’s intentions for the sector^[3]. A shift in tone, even without legislative change, can affect project timelines and financing costs in ways that eventually feed through to the wholesale market.

John Haw, CEO of UK energy procurement firm Fidelity Energy, said: “The Manchester bus model is genuinely interesting and it worked well for transport. Whether it translates to energy is a different question, because the capital requirements and the international investor base are completely different. What matters for businesses is not the political philosophy behind it but whether it speeds up or slows down the delivery of the generation and grid capacity the UK needs. That’s the question I’d be asking, and the honest answer is we don’t know yet.”

North Sea: the unresolved question that matters most for near-term supply

On North Sea oil and gas, Burnham has been notably cautious. During his Makerfield campaign he said he had “not completely made a view on the North Sea issue”^[7], while GMB Scotland has urged him to halt the government’s “rushed and needless” run-down of the sector and the current Energy Secretary’s ban on new licences announced on the day of Burnham’s Makerfield victory has itself become politically contentious^[7]. The existing ban on new licences is not due to come into effect until 2030, and existing fields are permitted to continue operating until they run out, but Burnham’s ambiguity on the issue opens the possibility of a softer position than his predecessor’s.

For UK businesses procuring gas, the North Sea question connects directly to domestic supply and import dependency. The UK’s domestic gas output is already at its lowest level since the early 1970s, and Norway supplies nearly 70% of all UK gas imports^[2]. Whether Burnham moves to a more flexible position on North Sea development, or maintains the existing policy, will have consequences for the UK’s exposure to global LNG pricing and the kind of supply concentration risk John Haw has flagged consistently in recent months.

John Haw, CEO of UK energy procurement firm Fidelity Energy, said: “Burnham’s silence on the North Sea is actually quite informative. A politician who wanted to maintain the existing ban without question would have said so by now, particularly with the unions pushing hard in the other direction. The fact that he’s said he hasn’t completely made up his mind suggests there’s room for a different position, and for businesses that care about domestic gas supply and import exposure, that’s worth watching carefully. It doesn’t change what businesses should be doing about their contracts today, but it does change the medium-term risk picture depending on which direction he goes.”

What this means in practice, and why the fundamentals haven’t changed

The arrival of a new Prime Minister does not change the market conditions UK businesses are operating in right now. Near-term wholesale gas prices have eased on the back of the Strait of Hormuz peace deal. The generator levy rose to 55% today. Network charges are heading higher. And DESNZ has just had £2bn taken out of its budget with project-level detail not due until Autumn. A Burnham premiership adds a layer of medium-term policy uncertainty on top of all of that, but it does not resolve any of the near-term procurement decisions businesses need to make.

John Haw, CEO of UK energy procurement firm Fidelity Energy, said: “Every time there’s a change in political leadership, businesses find a reason to wait and see before making decisions. I understand the instinct but it’s the wrong one. The market doesn’t pause while Burnham settles in, and the nearer your contract end date gets, the worse the pricing you tend to obtain. The signals on green levy reform are genuinely interesting for the medium term, and we’ll be watching them closely. But they’re not a reason to sit on your hands today.”

He adds: “The most important thing a new prime minister could do for business energy costs is provide clarity and stability, not just on policy direction but on the detail and the timeline. The CBI has already flagged that uncertainty is costing investor confidence. Burnham has talked about bringing down bills and stronger public control. Those two things can be compatible, but only if the transition between them is clearly communicated. That’s what businesses need from whoever walks through the door of Number 10, and it’s what the energy sector has been asking for long before this leadership change.”

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