Labour minister insists cutting energy bills 'always long-term aim' despite manifesto vow

Energy minister Michael Shanks was put under pressure over energy bills being reduced under the Labour government after costs have gone up by an average of almost £500 since Keir Starmer’s administration entered office.

Mr Shanks, the MP for Rutherglen, also told MSPs on Holyrood’s net zero, energy and transport committee that his government will not try to roll out a new fleet of small modular nuclear reactors north of the Border while the SNP government continues its long-standing opposition to the technology.

The energy minister was put under pressure by SNP MSP Kevin Stewart, who pointed to the Labour general election manifesto that stated “we will save families hundreds of pounds on their bills, not just in the short term but for good”.

During the election campaign, Sir Keir Starmer said Labour would “help families save up to £300 off their energy bills”, with a timescale given as 2030 - when the government aims to have hit its clean power target.

Read more: Why the SNP is now singing the praises of Labour's GB Energy strategy

Mr Stewart said: “GB Energy was sold as bringing bills down, with your party pledging to cut bills by £300 during the course of the election.

“When will this become a reality under GB Energy? As we all know, bills have risen by an average of £449 since you came into office.”

In response, Mr Shanks stressed that “we said we would be reducing bills in the long term”, adding that “we didn’t say overnight that would be possible”, warning “that’s just not credible”.

He added: “We are, at the moment, far too exposed to volatile fossil fuel prices.

“What we said was in the long term, bills will come down. We see that as still an absolutely vital part of what we’re aiming to do.”

Energy policy is largely reserved to Westminster, but devolved planning laws give Holyrood ministers a veto over power stations, with the SNP holding an opposition to nuclear power.

Read more: SNP told to rethink nuclear opposition after Grangemouth energy jobs losses

Meanwhile, ministers at Westminster are believed to be looking at whether lower energy prices for certain parts of Britain could be used to kickstart growth.

Government sources said ‘zonal pricing’ of energy is “on the table” as Sir Keir Starmer and Chancellor Rachel Reeves grapple with how to boost the UK’s sluggish growth rate.

Last week, Ms Reeves met with seven regulators including the energy watchdog, Ofgem, to hear their suggestions on “tearing down the regulatory barriers that hold back growth”.

According to a ‘read-out’ of the meeting released afterwards by the Treasury, one of the “promising ideas” which was discussed related to “energy tariff reform”.

Government sources have said there is interest in whether zonal pricing could be used to drive growth in Britain’s advanced manufacturing sector and encourage businesses to build factories in regions with abundant, cheaper energy.

A decision about whether to move to the system could be taken as soon as this summer.

If Britain were divided into zones, the bills paid by households and businesses in different parts of the country would vary based on the costs to produce and supply energy in that area.

It would mean that places like Scotland or the North of England with higher levels of electricity generation from offshore wind farms and relatively lower demand would have lower prices, while the south of England with its dense population and limited renewable energy would have higher prices.