A new age of industrialisation? Not at these electricity prices
John Healey promised Labour’s conference a new age of industrialisation. British industry pays the highest electricity prices in the IEA, about four times the American price, and gas prices do not explain why.
First published in Noise Cancelling
Regular readers may by now have guessed that I am not a fan of the current incumbents of Nos 10 and 11 Downing Street, and neither was I particularly fond of their inept predecessors either, both recent and of a different political hue. But I have to say that I am finding it especially hard not to puke every time I hear our backstabbing Chancellor talk about the economy.
His speech at the Labour Party conference in Liverpool was a particularly good example of the sort of revisionist echo-chamber rubbish that politicians seemingly never tire of uttering when addressing the faithful, but it also reflected either his complete ignorance of, or utter contempt for, the wider audience. I cannot decide which of these two it was, but more than likely it was both.
As for the revisionist stuff, the FT summed up that bit of the speech rather politely. Labour politicians, it pointed out, cannot talk about the UK’s economic record without a kind word for John Major, or about the problems since the financial crisis without mentioning the crisis itself. That, it argued, reflects “a wider inability among politicians to talk about the real causes” of the country’s problems, from the young people not in education, employment or training to rising welfare spending and the absence of growth.
But above and beyond this, Mr Healey’s hubris knows no bounds given his recent claims to be bringing back hope, economic growth, jobs, apprenticeships, investment and fiscal discipline. But greatest of all on this list of unmitigated tripe was his claim in Liverpool that he would be ushering in a “new age of industrialisation”. Quite how he plans to do this is not yet clear given that UK industry confronts the highest industrial electricity prices in the world, and his government’s energy policies will not only do nothing to alleviate this but make it worse. And it’s not just the highest by a little bit. Industrial electricity prices in the UK are now four times higher than those in the US and China, more than twice as high as those in Korea and about 50% higher than in France, Germany and the IEA median, which includes data from 28 developed economies (see below). To complete the picture, 26p/kWh in the UK also compares with Canada, Norway (from whom we import gas and oil), Finland, Sweden, New Zealand and Portugal, all of whom have prices below 10p/kWh.
British industry pays four times the American price for electricity
Of course, let’s not forget that Mr Healey’s bacon-sandwich-eating mate, Ed Miliband, claims that this is because we are dependent on rapacious capitalists around the world exporting gas to the UK, for which we have to cough up, and in turn argues that we should therefore go harder and faster at net zero to achieve energy independence with more wind turbines and solar panels. This is another enormous Miliband lie, as is evident from the comparison below, which sets UK industrial gas and electricity prices against the IEA median.
UK gas is close to the IEA median. UK electricity is 69% above it.
| Industrial price | UK | IEA median | UK vs median |
|---|---|---|---|
| Electricity | 26.63p | 15.79p | +69% |
| Gas | 5.77p | 5.86p | −1.5% |
Clearly, UK industrial gas prices, whilst significantly higher than those in the US for example, are considerably lower than in many peer economies, including many across Europe who import a significantly greater proportion of their gas needs than the UK does.
Ludicrously high industrial electricity prices in the UK are a product of the UK’s uniquely stupid de-industrialising energy policy and have nothing to do with the price of imported gas – which we would import a lot less of if this government and its predecessors had not tried to kill off the UK’s home-grown energy industry.
Which brings me back to the hubristic Mr Healey, whose latest claim is that he will usher in a new age of industrialisation in the UK. One just has to marvel at the self-delusion, coming only days after one of the UK’s leading industrialists, Sir Jim Ratcliffe, announced that his business, INEOS, would be suspending operations and mothballing all three of its chemical plants in Hull because of unsustainably high energy costs in the UK (in part triggered by big increases in gas prices in recent months) and “unsustainable carbon taxes”.
This followed the closure of the Grangemouth refinery in Scotland, for the same reasons, in April last year, the closure of Tata’s last blast furnace at Port Talbot in 2024, and the nationalisation of British Steel in July this year, triggered by losses incurred as a result of unsustainably high operating costs. The business was owned by a Chinese firm called Jingye and, if closed, would have left the UK as the only G7 economy unable to produce the high-quality virgin steel used in construction and the rail industry.
All of this of course follows decades of relative decline in British manufacturing, which in the 1980s accounted for 25% of UK GDP, about 15.5% in 2000 and only about 8.5% in 2026.
One wonders if Mr Healey is just ignorant or deluded. I am not sure which, but neither is a particularly attractive trait in a UK Chancellor charged with making important decisions that will affect the UK economy for years to come. Quite how he plans to usher in this new age of industrialisation he didn’t make clear, but I imagine some of the Labour faithful would have lapped it up.
Outside this echo chamber, however, I suspect that this comment will have been treated as laughable by industrialists across the UK grappling with the headwinds of unsustainably high energy costs and employment taxes, and looking enviously across the Atlantic at an economy with industrial electricity prices that are one quarter of those here.
Given that I am going to have to pay close attention to what Mr Healey says in the weeks ahead, I am going to find it quite difficult not to lose my temper. The Budget speech in particular is going to be an endurance test for sure.
The only way I can cope, I have decided, is to see Mr Healey as a doppelgänger for Dobby, the fictional house-elf in the Harry Potter stories, whom I was very fond of. It’s the only solution.
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