Burnham becomes UK prime minister, pledging cheaper energy bills, more public control

Andy Burnham has been officially appointed as the UK's prime minister July 20, pledging to reindustrialize Britain, tackle the cost of living, and enact greater public control of essential services such as energy and water.

Burnham replaces Keir Starmer at the helm of the Labour Party, a little over two years after Starmer led Labour to a landslide election victory, returning the party to power for the first time since 2010.

The new prime minister's maiden speech as Labour leader on July 17 contained limited policy detail but reinforced several themes that have dominated his public messaging in the run-up to taking office.

Burnham promised to lead the UK to a place "where life is more affordable" -- a tacit acknowledgment that UK households and industrial users continue to face some of the world's highest energy bills.

In a separate speech in late June, the new prime minister pledged to set out a 10-year plan to bring down the cost of energy and other essential services for households and businesses.

UK Energy Minister Michael Shanks, speaking at an AI conference on July 14, said "affordability is the government's number one mission and will be even more of a focus when Andy Burnham [becomes] prime minister."

Clean power push

News reports over the weekend (July 19-20) suggested that Burnham is preparing a cost-of-living package as one of his first actions as prime minister, aimed at cutting household energy bills.

The Guardian on July 18 reported that Burnham is considering overhauling gas standing charges, shifting renewable energy levies into general taxation, and reducing value-added tax on electricity. The proposals could save households about GBP130 annually while making heat pumps cheaper to run compared to gas boilers, according to the report.

For Burnham, the political test will be whether such promises to cut bills can be reconciled with the investment required to decarbonize the grid, expand renewables and maintain supply security.

Starmer's government made its pursuit of a clean power system by 2030 a central element of its administration, overseeing two renewables auctions during its tenure. More than 24 gigawatts of new capacity were awarded in the two auctions.

The next auction, Allocation Round 8, opened for applications on July 20 as Burnham became prime minister.

The auction aims to maintain momentum for a sector already racing to meet the 2030 clean power target, which envisages a UK electricity system that is 95% low-carbon by the end of the decade, backed by a 5% strategic reserve of gas-fired generation.

The plan implies a quadrupling of offshore wind capacity, a tripling of solar and a doubling of onshore wind from the time when Labour took office.

Yet, delivery remains uncertain. Analysts at S&P Global Energy CERA estimate that unabated gas will still account for about 19% of domestic UK generation by 2030, well above the clean power plan's 5% target, though sharply lower than roughly 35% in 2023, the last full year before Labour came to power.

Public control

Among other key priorities, Burnham has repeatedly spoken of enacting "greater public control" of Britain's utilities, including energy, water and transport -- language that has raised questions about how far the new government could go in reshaping privately owned utilities.

"If we don't have sufficient public control over the cost of the essentials, how can we have control over inflation, public spending and the rest of the economy?" Burnham said in his July 17 speech.

Investors have already shown sensitivity to Burnham's rhetoric. On May 15, as he positioned himself to challenge Starmer, UK utility stocks recorded their fourth-largest daily decline since privatization 40 years ago, amid concerns that a more radical Labour leadership could revisit ownership models or tighten state direction of the sector.

Full-scale nationalization, however, remains unlikely, according to industry observers.

Peter Bisztyga, head of European utilities and renewables at BofA Global Research, said buying back utilities would cost "hundreds of billions" of pounds, which "seems improbable given the UK's fiscal position." The analyst also noted that the sector is already subject to significant regulatory controls.

A more probable route could be to use public institutions to influence investment, rather than taking assets outright into state ownership.

Industry observers see scope for Great British Energy, the government-owned energy company created after Labour's 2024 election victory, to take a larger role in developing clean power projects and shaping capital flows into the sector.

Great British Energy, which aims to deliver at least 15 GW of clean energy generation and storage by 2030, has already invested in a floating wind project in Scotland and is also progressing plans to build the UK's first fleet of small modular reactors.