Rachel Reeves’ flagship promise to cut household energy bills by £150 could be effectively cancelled out by rising nuclear costs, hidden green levies and new charges introduced by the energy regulator, a former Labour donor has claimed.
Announced in last week’s Budget, the chancellor’s plan involves scrapping the Energy Company Obligation (ECO) scheme, which she said would reduce bills by £150 from April. Labour had originally pledged to reduce bills by £300 during the election through major green investment, although that saving has yet to materialise.
However, green entrepreneur and former Labour donor Dale Vince argues that the financial burden of developing new nuclear capacity — particularly Sizewell C — will almost entirely absorb the promised saving. According to Ofgem’s impact assessments, levies linked to the nuclear project will rise over the next four years, reaching £338 annually by April 2030.
At the same time, the Office for Budget Responsibility has confirmed that £1bn a year will be added to household bills to help fund energy secretary Ed Miliband’s next renewables auction, known as allocation round 7 (AR7). This has led to concerns that households will end up paying more overall, despite the Budget’s headline promise.
Vince told The Independent that the £1bn saving trumpeted by the chancellor will be “entirely wiped out” by the Sizewell C funding mechanism — known as the Regulated Asset Base (RAB) levy — which will begin charging consumers long before construction starts.
He said: “The chancellor’s energy savings will be wiped out overnight by the cost of Sizewell. From November, the government has decided to load the financial risk of this project straight onto our energy bills — before a single shovel hits the ground. And this isn’t some one-off charge. We’ll be subsidising Sizewell for at least 10 years, maybe longer — nuclear projects always run late. And we could still be paying for decommissioning well into the 22nd century.
“Imagine ordering a car and the dealership starts charging you before they’ve even built the factory — that’s what’s happening here.”
Vince argued that the impact on businesses will be similarly significant, estimating that charges could reach £140 a year for a small hairdressing salon. The levy applies to all households and non-exempt businesses connected to the UK grid. Ofgem has confirmed allowed revenue of £1.4bn for the first charging period between November 2025 and March 2027.
The government has rejected Vince’s claims, insisting the numbers are inflated.
A spokesperson for the Department for Energy Security and Net Zero said: “This claim is wrong. Sizewell C will add around £1 a month on average to household bills during construction, a small fraction in comparison of the average £150 of costs off household energy bills from April announced in the Budget.
“We are delivering a golden age of nuclear – securing thousands of good, skilled jobs and billions in investment. Sizewell C will deliver clean electricity for the equivalent of six million of today’s households for at least six decades. Analysis shows it could save £2 billion a year across the future low-carbon electricity system once operational, resulting in cheaper power for consumers.”
