The cost of Reform UK’s anti-environmental policies

Reform UK are having a major impact on UK politics at the moment. They continue to ride high in the polls and won as many seats as the Conservatives lost in the local elections earlier this month. Meanwhile, they continue to make headlines with tall claims, including a series of announcements today aimed squarely at Labour voters, such as scrapping the two-child limit and reinstating the winter fuel payment.

To help pay for these policies, Reform UK has said it will scrap net zero with various figures banded around by the party’s representatives for how much this will raise – anywhere from £225bn to £45bn. The Institute for Government, who’s analysis is used to calculate the larger of these two figures, has already said the Party has misrepresented its analysis and failed to acknowledge that most of this investment will come from the private sector – in other words, Reform UK’s policies would likely destroy much needed investment into the UK economy.

But what is the real cost of their anti-renewable and anti-net zero policies? It is important to ensure all political parties are accountable to the public and the impacts of their policies are estimated in a transparent and consistent manner. In that spirit, we take a closer look at Reform UK’s proposals thus far and their impact.

Scrapping 2050 legislation and halting new large-scale renewables

The party does not explicitly say they will halt large-scale renewables but have proposed to cut all renewable subsidies, which would include contract for difference (CfD) mechanisms, and introduce a windfall tax on wind and solar. Combine these two and any new large scale renewable generation project becomes unviable.

For ease of calculation, we assumed large-scale renewables to be wind and solar that are categorised as major power producers (MPPs) in government statistics. In other words, these are only large-scale installations roughly above 50 MW and do not include installations such as rooftop solar on commercial or residential sites which are harder to constrain. Given these calculations are for illustrative purposes, we also assume that halting would begin from 2026.

To estimate the inevitable investment freeze from such a decision, we first looked at the climate change committee’s seventh carbon budget — which estimates spending of over £98bn for new electricity supply between 2026 and 2030. Most of this investment represents capital expenditure for renewables and is expected to come from the private sector – which is unlikely to invest under their proposed policy changes.

This investment is not only intended to decarbonise the power system but also increase electricity generation to meet growing demand from data centres, electric vehicles and heat pumps. Reform UK is yet to say if they intend to halt all forms of new electricity demand as well. If that isn’t the case, then additional demand will have to be met from alternative sources such as gas and nuclear, which are considerably more expensive than renewables. In fact, the consultancy Aurora Energy highlighted in a recent report that replacing all CfD backed offshore wind with gas plus carbon capture units will raise the cost of energy by £10bn (in 2022 prices) over the next decade.

To estimate the wider impact on the economy, we consider the gross value added (GVA) effects of renewables investment. We estimate that this decision will effectively stop the building of over 48 GW of large-scale renewable capacity in the UK by 2030. This includes 25 GW of offshore wind, 10 GW of onshore wind and 13 GW of solar. Every GW of offshore wind adds £2 – 3bn in GVA to the economy. A loss of 25 GW would wipe out the potential for £50 – 75bn in value. For onshore wind the estimates are £1.6bn for every GW and £0.075bn for every GW of solar. Reform UK’s policies would cumulatively deprive the economy of £67-£92bn in GVA. In today‘s figures, that is almost 3% of the UK‘s entire GDP.

The latest jobs figures of direct and indirect jobs created by offshore wind show that the sector supports over 32,000 jobs with 17,394 and 14,863 direct and indirect jobs respectively. These figures are from 2022, and estimates suggest it would have roughly doubled by the end of 2025. The Offshore Wind Skills Intelligence Report estimates that roughly 100,000 jobs would be created by 2030 under a scenario where offshore wind capacity is over 40 GW. If Reform UK were to stop all new large-scale renewable generation from 2026 – 30, an estimated 28,300 jobs would be foregone across the country – including in local authorities such as North Lincolnshire and North East Lincolnshire, both areas where Reform UK secured major wins at the recent county and mayoral elections. Another way of estimating this figure is by calculating the full-time equivalent (FTE) per MW of installed capacity. In the case of offshore wind, independent analysis shows an FTE of 1.4 per MW (an average of the range provided in the analysis). Based on this, roughly 35,000 jobs would be foregone under Reform UK’s policies.

Image: istock

Similarly, the onshore wind sector supports 12,000 jobs in Scotland alone and reaching the 30 GW target by 2030 takes this up to 27,000 jobs across the UK. A study by Climatexchange for Scotland calculates an FTE of 1.7 – 2.0 FTE per MW for onshore wind, this includes construction and operations jobs which will be lost over the next five years. Using these figures, we can estimate that Reform UK’s policies would cost us over 18,500 jobs in onshore wind over the next few years. The reason for a significantly larger number of jobs foregone in this period is because of the significant uptick in construction jobs which will eventually reduce, and only operational jobs remain. We assume a static scenario where we estimate these jobs within a five-year period, however, wind and solar projects could continue to be built after that period.

The Solar Trade Association estimates 0.57 FTE per installed MW capacity of ground mounted solar. Using this, we can estimate that Reform UK’s policies would eliminate the potential for 7,400 jobs.

In total, across wind and solar, Reform UK’s ambition to halt all large-scale renewables would destroy over 60,000 jobs by the end of this decade. This is a significant underestimate given we do not consider indirect and induced jobs in the economy. CBI Economics estimates that today, 273,000 people are employed in net zero businesses directly across the UK and an additional 678,000 across the supply chains. Reform UK’s anti net zero policies could put many of these jobs at some form of risk.

It is certain that scrapping renewables development would result in continued dependence on gas imports, leaving the UK vulnerable to price spikes like that experienced in 2022. In the National Energy System Operator’s clean power scenarios for 2030, a 2022-style gas price spike would cause an increase in the yearly electricity bill (including EV charging costs) of just £40 per household, compared to the counterfactual business-as-usual scenario in which electricity bills would jump by £270 per household. This is again an underestimate of the impact of Reform UK’s policy of completely blocking major renewables development, as NESO’s business-as-usual scenario does contain some level of continued renewables rollout. So, it is reasonable to assume that, in the event of a gas price spike, Reform UK’s policy would have added at least £230 per household energy bills in 2030 compared to the government’s current targets.

Scrapping all ​“green levies” on energy bills

The levies on gas and electricity bills raise about £5.9bn a year. These levies primarily fund renewables contracts, the Energy Company Obligation (ECO) and the Warm Home Discount scheme. On an average energy bill, these levies amount to roughly £203 a year, which the party has committed to saving. However, scrapping these levies isn’t straightforward as existing renewable contracts are legally binding, so these costs have to be paid one way or another and either bill payers or taxpayers will have to foot the cost.

Most of the levy money pays for schemes that drive investment, including in renewables and nuclear power well beyond the end of this decade. If we are to suspend rationality for a moment and assume that Reform UK can ​”scrap” these levies, one of the most significant impacts would be on the ECO scheme. A £1.1bn‑a‑year insulation budget that is investing in upgrading the homes of the fuel-poor across the country and saving those families hundreds of pounds every year on their bills. Past evidence shows that for every £1 the Government invests into domestic retrofit, UK GDP is uplifted by £3.20 — once supply‑chain and consumer spill‑overs are counted. Pulling the plug therefore wipes out roughly £3.5bn of annual GVA that would otherwise circulate through small builders, materials plants and local retail. If we assume ECO was to be sustained at that level under the current administration for five more years, the GVA loss would amount to £17.5bn.

The Insulation Assurance Authority warned in 2022 that abolishing the ECO levy would endanger ​“more than 30 000 jobs” across the efficiency sector. That figure aligns with academic work showing ~19 direct jobs are created for every €1m invested in building efficiency.

Image: iStock

Removing the 5 % VAT rate on household energy

Cutting the VAT rate from 5 % to zero would cost the Exchequer £2‑3bn a year and save the typical household about £75‑£100. VAT is a transfer, not an investment: saving has no direct bearing on productive capacity. GVA impact is therefore neutral (unless government fills the hole by cutting other spending, which could reduce demand elsewhere). We don’t expect a major impact on jobs as a result of this policy.

Annual North‑Sea licensing and a UK shale‑gas revival

Given Reform UK wants to substitute large scale renewables with additional oil and gas from the North Sea and UK’s shale reserves, we need to look at the investment trends in fossil sources compared to clean energy. If you consider the party’s desire to scale up North Sea production, the associated capital investment pales in comparison to renewables. The North Sea Transition Authority estimates capital expenditure to fall to £13bn over the next five years compared to £23bn in the previous five.

In fact, for every £1 invested in the North Sea production over the past three years, we estimate £5-£8 was invested in renewables. It is evident that energy investment in the UK and globally is being driven by renewables and Reform UK’s ambitions to revive the terminally declining North Sea reserves would be disastrous from an investment perspective.

The North Sea Transition Authority reports upstream capital spend of £5.95bn in 2024, up from about £4.7bn the previous year. Industry lobbyists say an annual licensing round might lift capex by ~15 %. Even though this is highly unlikely, we assume this figure for our calculations.

A 15 % uplift in investment equates to roughly £0.9bn extra capex a year. Oil and gas GVA typically runs at ~65 % of capital outlays, so the incremental boost is about £0.6bn GVA. This is less than 1% of the £75bn we identified above for renewables.

Robert Gordon University’s workforce projections show a steady decline in North Sea oil and gas jobs through the rest of this decade. Recent estimates by experian suggest roughly eight direct and indirect jobs per £1m of new offshore investment in the North Sea. Applying that ratio to £0.9bn gives roughly 7,000 mostly short‑lived drilling and fabrication posts, dwarfed by the 60,000 plus direct jobs linked to the renewables pipeline.

Delaying the EV‑sales mandate and scrapping ULEZ /​LTNs

The automotive sector is experiencing significant turbulence under the current trade war between the US and China. We have therefore avoided putting any estimates to the economic impact of delaying the EV-sales mandate. Similarly, estimating the economic impact of scrapping ULEZ/​LTNs is a complex process well beyond the scope of this analysis. However, it is worth noting that firms are already responding to the government’s zero emissions vehicle mandate and marketing more products to consumers. In fact, all car manufacturers met their targets without being penalised last year and delaying or deferring the EV mandate will only cause further confusion and deter investment.

In summary, our analysis shows that Reform UK’s anti net-zero policies will cause significant damage to the UK economy and destroy tens of thousands of good paying jobs.

Image: House of Commons (CC BY-NC-ND 2.0)