Andy Burnham can slash energy bills by £200 a year with these policies, says Octopus Energy founder

Octopus Energy founder Greg Jackson has told Andy Burnham, the Labour leader, that reversing one of the previous government’s key energy decisions could slash household energy bills by nearly £200 per year. The claim comes amid rising costs, with households seeing their energy bills increase by £221 annually in July, bringing the average annual electricity and gas bill to £1,862. Jackson, who is a Labour donor and an informal adviser to Sir Keir Starmer’s government, argues that market reforms could significantly reduce costs for both families and businesses. Jackson, the CEO of Octopus Energy, a company that has grown from its founding to become a £20bn enterprise in just a decade, urged the incoming prime minister to overhaul the UK’s electricity market. According to the firm, such changes could lead to savings of up to £114 per household annually, with additional savings of £75 on electricity bills if levies were shifted into general taxation. Higher earners would bear a greater share of the cost through the tax system, while businesses and industry could collectively save an estimated £6bn each year. These measures, the company claims, could unlock total savings of up to £83bn by 2050. The proposed reforms aim to address inefficiencies in the current energy market, which Octopus Energy says is costing households billions. The company highlights that expensive gas frequently sets the price of electricity, even when cheaper renewable sources are available. Wind farms are sometimes forced to shut down despite being capable of producing power, while batteries are charged when they should be discharging, and interconnectors import electricity during times of surplus rather than exporting when needed. Gas plants are also used unnecessarily to balance supply, leading to inflated costs. These inefficiencies have added £1.5bn to household energy bills in the past year alone, and the company warns that this figure could rise to £10bn annually by 2030 if the system remains unchanged. Reforming the market, Jackson argues, would make the system more efficient, unlock the full potential of wind, batteries, interconnectors, and flexible demand, and reduce the need for costly grid upgrades that could amount to £30bn over 21 years. Such changes, he insists, would benefit everyone in the country while supporting the transition to renewable energy. Jackson emphasized that reversing the previous government’s decision, which he described as having been made without a viable alternative, could align the UK with many OECD nations in terms of energy pricing and efficiency. He argued that this shift would not compromise the nation’s clean energy goals but instead enhance them by making better use of existing resources. The current system, he said, creates a chaotic environment where energy is wasted, costs are artificially inflated, and opportunities for innovation are stifled. The timing of Jackson’s remarks is particularly significant given the government’s focus on reducing the cost of living. As part of its broader strategy to improve economic conditions, the new administration has pledged to drive growth in every region of the UK. Energy prices, which have risen sharply due to global factors including Donald Trump’s actions against Iran and the blockage of the Strait of Hormuz, a vital route for a fifth of the world’s oil and gas, have become a central issue in this effort. For Burnham, whose leadership role is pivotal in shaping the new government’s agenda, addressing energy costs is not just a policy goal but a political necessity. Octopus Energy’s warnings highlight the urgent need for systemic change in the UK’s energy sector. With projections indicating continued financial strain on households and businesses, the call for reform is gaining momentum. The company’s detailed analysis suggests that the benefits of such reforms extend beyond immediate cost savings, offering long-term advantages for both the economy and the environment. As the new government prepares to take office, the pressure to act on these recommendations is mounting.