UK and France discuss ‘one-in, one-out' migrant returns
Britain and France are preparing to announce a one-in, one-out migrant returns deal in an attempt to break the model of the smuggling gangs.
Sir Keir Starmer and President Macron are working on an arrangement that would allow Britain to send back illegal migrants who cross the Channel in small boats to France.
In return Britain would accept migrants with a legitimate case for joining family already in the UK.
The plans for the pilot could be announced as soon as next week to coincide with the first anniversary of Starmer's premiership, although other government sources suggested that later in the summer was more likely.
A government source said: 'It'll start as a pilot but it's to prove the point that if you pay for your passage on a boat then you could quite quickly find yourself back in France.'
Despite only being a pilot, it would mark a significant moment in relations with the French over the small boats crisis as it is the first time that France has shown its willingness to take back migrants from the UK.
Talks over a returns deal have been led by Yvette Cooper, the home secretary, who has been credited with strengthening relations with France through her close partnership with Bruno Retailleau, the French interior minister.
Under the deal, a joint UK-France processing system would be set up that would identify migrants who have a valid claim for family reunification in Britain.
For each migrant relocated to Britain, an illegal migrant would be returned to locations across France, away from its northern coast.
Any migrant who makes a return journey to the UK would be immediately identified through their biometric details and sent back once again.
The deal will begin through a small pilot scheme designed to show 'proof of concept'. Government sources said that they were determined not to repeat the 'mistakes' of the previous government's Rwanda scheme, that they believe overpromised in terms of solving the small boats crisis.
They pointed to other progress that they hope will combine to start reducing the numbers of migrants arriving on small boats amid a record high of 18,518 this year, which is 42 per cent higher than this time last year.
French police are due to start implementing a law that will allow them to intercept migrant boats up to 300 metres into the sea within days in another move that UK ministers hope will reduce the numbers crossing.
However, the Conservatives branded the limited plans for a one-in, one-out deal 'pathetic' and said that the French could not be trusted given the £480 million, three-year deal that Britain paid to France to bolster security, which has only led to increasing numbers making the crossing.
Chris Philp, the shadow home secretary, said: 'We pay the French half a billion pounds to wave the boats off from Calais, and in return we get a migrant merry-go-round where the same number still come here.
'The French are failing to stop the boats at sea, failing to return them like the Belgians do, and now instead of demanding real enforcement, Labour are trying a one in, one out gimmick.
'If Labour were serious, they would not have scrapped the returns deterrent the National Crime Agency said we needed — instead, they've surrendered our immigration system.'
Macron is making a state visit to the UK between July 8-10 along with his wife, Brigitte. The couple will be hosted by the King and Queen at Windsor Castle.
The French president will also meet Starmer for talks about sealing the two country's security partnership and work on combating the people smuggling gangs that facilitate Channel crossings.
Downing Street refused to comment on the specifics of the deal but said that 'our relationship with the French is stronger than it has been in a number of years'.
The final details of a migrants return deal have yet to be agreed and government sources said they were wary of announcing a deal before it is ready to be implemented because of the risk it would lead to a rush in crossings. Smuggling gangs have in the past offered 'closing down sale' deals to migrants whereby they advertised discounted prices if they signed up before a particular new scheme is introduced.
Retailleau first opened the door to a migrant exchange deal for the first time in April during a visit to the UK. He said: 'I do think that there must be an agreement that we can come to, a bilateral agreement between governments.
'Because we see many of those who land on British soil don't come back. Even when one has crossed the Channel, if one is sent back that will send a clear message.'
The French interior ministry confirmed later in the month that it would work on the basis of a 'one-for-one principle'.
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The Guardian
an hour ago
- The Guardian
‘They didn't think we'd have the guts': How Labour rebels forced the government's welfare U-turn
The Conservative shadow cabinet minister looked more cheerful than at any point in the 12 months since the general election. 'How did they get into such a mess?', they asked. 'What are they going to do?' The answer was revealed a couple of days laterwhen Keir Starmer and his ministers made a series of emergency concessions on their flagship welfare reform programme, to prevent the otherwise far-greater ignominy of the programme being voted down in the House of Commons. U-turns of various sorts are an inevitability in government; the skill lies in how elegantly you can perform them. And this week's eventual cave-in to backbench Labour pressure – formally announced by a Downing Street statement after midnight on Thursday – was very, very messy indeed. To return to the shadow minister's gleeful query, how did it end up like this? The narrative will depend on who you ask. But a common thread, even among some in No 10, is the idea of a government worryingly disconnected from its own MPs. From the moment in March that Liz Kendall, the work and pensions secretary, first set out consultative proposals to overhaul welfare payments, it was evident that a large number of backbenchers had worries about elements of the plan. Notably, the green paper set out a significant tightening of the eligibility for personal independence payments (Pips), which help those with long-term illness or disability, causing concern not only among MPs but also numerous charities. But armed with a 150-plus Commons majority – and what felt to some MPs like an almost messianic insistence on turning around an increasingly unaffordable social security system – Downing Street ploughed on. 'This has happened because of an arrogance from the top,' one veteran Labour MP said. 'On the day of the green paper, the whips were saying they thought a maximum of 10 people would actually rebel. They were laughing at us. 'They didn't think anyone would have the guts from the new intake. But they [new Labour MPs] have been doing their own organising.' As it turned out, there was a lot of organising, from all sides of the parliamentary party. With Starmer largely preoccupied with other subjects – including the G7 summit in Canada and a change of course over a national inquiry into grooming gangs – MPs were taking action. The crunch point arrived on Monday with the publication of an amendment intended to kill off the welfare bill at its second reading in the Commons on 1 July. Initially signed by 108 Labour MPs, it soon had the backing of more than 120. These were not the perennial malcontents primarily from the Labour left – the 'maximum of 10' so dismissively summed up by the party whip. Signatories included a string of senior backbenchers who chair select committees, and numerous 2024-intake MPs. How did dozens of hand-picked, newly arrived backbenchers, once thought so loyal they were dubbed 'Starmtroopers', find themselves within a year on the brink of a rebellion that could have defeated the government? For many, the problem dates back to the very early days of the parliament and a kind of vicious discipline that resulted in seven MPs being suspended from the Labour party over a vote on the two-child benefit cap. Three of those MPs remain exiled today. Even loyal MPs were under orders never to submit amendments – or to make their views known publicly on any subject. 'It was like student politics,' said one. 'Keep your mouth shut and maybe we'll let you on the entertainment committee.' 'Arrogant' is the word MPs are using most of all. It was the blithe assumption by whips and No 10 that any rebellion would fold that sent many over the edge. 'They tried to treat the PLP [parliamentary Labour party] like naughty children,' one MP said. 'They all did what they were meant to do and raised the issue privately, and then got totally ignored.' Another repeated charge within the party is that even when its hierarchy did recognise the disquiet, the response tended to be either complacency or high-handed, bungling menaces. MPs described outreach to them as having been limited to presentations and charts showing the growing size of the welfare budget and increases in numbers going on Pip. 'We asked to see the prime minister or the chancellor and we got a presentation from officials,' one said. 'They were very, very dismissive.' MPs say they received a litany of threats, including the possibility of a general election. Those on the right of the party were warned their actions could bring about a leadership challenge that would be won by Angela Rayner. The same threat was made to those on the left, but with Wes Streeting as the looming spectre. Others say they have received veiled threats of deselection, or that their funding for the next general election would be decided on the basis of whether or not they toed the line. One party official allegedly rang a rebellious MP's husband in order to get her to back down. 'I don't even think some of this is sanctioned by No 10,' one MP said. 'Until Wednesday they had their fingers in their ears. But those who are responsible for party management have been absolutely losing it.' After the implications of Monday's amendment became clear, outreach efforts finally began. Even Rachel Reeves, the chancellor, made a rare appearance on the Commons terrace on Wednesday evening to try to persuade MPs over a glass of rosé. 'She doesn't want to be £5bn out of pocket,' one MP said. Yet the number of rebels continued to grow, and No 10 finally bowed to the inevitable. On Thursday morning, the prime minister used a Commons statement ostensibly about international affairs to promise a welfare rethink. Until that point, Starmer had seemed oddly detached from the issue, surfacing intermittently at summits to bat away questions about the revolt – or 'noises off' as he termed it – as a distraction from the vital task of transforming welfare. Some MPs view this as indicative of a prime minister more than usually disconnected from the everyday grid of parliamentary business, as illustrated by the statistic that since winning the election he has voted in the Commons just seven times. A few have begun to openly speculate about what the situation means for Starmer's leadership. 'It is very bad for Keir. It is one in four of his MPs [that intended to rebel]. He is toast,' one MP said. A lot of the ire, however, has been directed at Morgan McSweeney, Starmer's chief of staff, and what one rebel called the 'overexcitable boys' in the PM's team. Inside No 10, there had been a determination to force through the reforms in part because of internal polling and focus groups that suggest the public backs the reforms when the context is explained – even wanting them to go further. One adviser, a close ally of the prime minister, said they had been so determined the vote had to go ahead – concessions or not – because the symbolism of being able to get the government's agenda through the Commons was so important. 'This is a fairly moderate reform,' the adviser said. 'If the government cannot make this modest saving – in a change that will not affect nine out of 10 people already on the benefit – then how can we pursue the political programme we need, to make the tough decisions the country needs us to take? It's impossible.' Other advisers are furious about the situation they have found themselves in. 'It's absolutely outrageous these people are prepared to throw away a historic majority because people were a bit mean to them on Twitter,' said one. Another said: 'Just wait and see what happens if they depose Morgan. It is over, then. Finito. Then we might as well hand the keys to Farage.' But other advisers in government say they can see how No 10 has played it wrong. One called it 'a staggering failure of political management from the people who supposedly had an iron grip on the PLP'. For many Labour MPs, however, it is about nothing more complicated than a government machine that forgot how to listen. 'Everything the government is now realising is something MPs have been saying for months,' one MP said. 'The fact that you cannot defend these cuts on the basis they will get people into work. The fact that you cannot guarantee the most disabled people won't be worse off. 'MPs are not idiots. We deserve to be listened to. We anticipated this failure. They are in this mess now because they were too arrogant to listen.'
Telegraph
an hour ago
- Telegraph
Starmer faces fresh MP rebellion over farmers' inheritance tax
Sir Keir Starmer is facing a fresh rebellion from Labour MPs over his inheritance tax raid on farmers. The Telegraph understands that more than 40 MPs are considering mounting an attempt to water down the policy, which threatens to bankrupt family farms by landing them with large inheritance tax bills. Rebels have been emboldened after forcing the Prime Minister to climb down on welfare cuts this week, in the third about-turn for the Government in two months. The U-turns – on benefits, winter fuel payment cuts and a national inquiry into grooming gangs – have added to a £40 billion black hole Rachel Reeves, the Chancellor, needs to fill at the next Budget. In a sign of fraying party discipline, MPs are plotting further rebellions on immigration and the two-child benefit cap, alongside the farming revolt. A senior rebel told The Telegraph: 'It's obviously a Government in crisis and the back benches are feeling ignored. The whole strategy is not working and we've got to change direction.' The fresh threats to Sir Keir's authority come after more than 100 MPs publicly broke with the Government over its disability benefit cuts, leading to a Number 10 climbdown this week. Backbenchers are considering using rebel amendments to exempt small family farms from changes to inheritance tax announced in the October Budget. Farmers have historically been able to pass down their land tax-free. But from April 2026, full tax relief will be capped for estates at £1 million, above which just 50 per cent tax relief will be available. A so-called 'rural growth group' has proposed that ministers consider the impacts of substantially raising the planned £1 million cut-off point at which estates lose valuable tax reliefs. The back-bench group has suggested estates receive full tax relief on the value of agricultural properties up to £10 million, 50 per cent to £20 million, and nil thereafter. This higher threshold would probably exempt almost all small family farms from inheritance tax, with only the richest paying the levy. The changes will be enacted in a Bill due to be voted on by MPs later this year, when they could be challenged by rebels. Sam Rushworth, Labour MP for Bishop Auckland, who is a member of the group, said they would 'consider what amendments to put down'. Mr Rushworth said: 'We are all keen to avoid amendments. I don't want it to get to that point. I am a Labour MP and I broadly support the Government, [but] I would like to see them bring forward different recommendations in the Bill.' A handful of Labour parliamentarians have publicly criticised the so-called 'tractor tax' plans. Markus Campbell-Savours, Labour MP for Penrith and Solway in Cumbria, a rural seat, said in December that he would vote against the Treasury's plans, telling the House of Commons: 'Let me be clear, if today was the real vote, I would vote against the Government's plans.' Sir Keir is also facing opposition to some of his new immigration rules which are expected to be voted on after the summer break, The Telegraph understands. Many of the immigration changes announced by the Prime Minister last month, including changes to visa routes, can be brought into effect without a vote in the House of Commons. However key parts of the proposals, including a new levy on international student fees, will require the endorsement of Labour MPs. A leading rebel told The Telegraph that the Government should spend the summer recess 'reflecting on an evidence-based approach as to how to build effective policies on immigration'. Another said: 'The leadership have to seriously look at their actions on this policy regarding the lack of consultation with backbench MPs.' A number of refugee charities have been lobbying parliamentarians over the changes after their repeated requests for meetings with Yvette Cooper, the Home Secretary, were turned down. 'Biggest mistake to date' MPs opposed to the changes were encouraged this week by the Prime Minister's apology for using the term 'island of strangers' in his speech announcing the immigration changes. One rebel Labour MP said: 'Of course it was right for the Prime Minister to apologise for the language that he used and understand the distress that it caused, but similarly, if the Government listened more on policy, this would be stronger'. This week Sir Keir apologised for the language in the speech, saying he had not read it properly before delivery because he had been distressed by an arson attack on his family home. But he gave no indication that the Government would U-turn on any of its immigration reforms. Nigel Farage, the Reform UK leader, said the apology was Sir Keir's 'biggest mistake to date'. He said: 'This is absolute proof that Keir Starmer has no beliefs, no principles and just reads from a script. 'Only a year into his premiership and he has already made his most fatal error. He has no intention of clamping down on immigration, both legal and illegal. 'This is his biggest mistake to date and one he will not be able to recover from – the public voted for change, instead they're being given more mass immigration and a spiralling crisis at the border. 'We need a leader that has vision and unwavering principles, that man is clearly not Keir Starmer.' Some Labour MPs on the party's Right wing were bewildered by the Prime Minister's sudden apology. One told The Telegraph 'that row-back is the most staggering of all' and said it would further erode discipline. Labour MPs are also bracing for a fight with the Government in the autumn over the two child benefit cap, which many want to see scrapped. The Prime Minister has reportedly committed to scrapping the cap but no announcement has yet been made. In a speech next week, Kemi Badenoch is set to mock Sir Keir's growing roster of U-turns. 'Now that his backbenchers smell blood, there's almost certainly another climbdown on the two-child benefit cap in the offing,' she is expected to tell the Local Government Association on Wednesday. 'Labour told us 'the adults were back in charge', but this is actually amateur hour. The Prime Minister is incapable of sticking to a decision.' A senior Labour party figure said that Downing Street's loss of control over MPs constituted 'an absolute s--- show'. The source said: 'This is an outburst beyond the welfare bill that has broken out. It is from loyal, moderate people who have defended the winter fuel cut for months and then had the rug pulled from under them with the U-turn. 'These are moderate MPs getting constant lobbying from disabled groups and constituents and now they've been told there is money available after all. Those frustrations are largely with Rachel. But they're also with No 10.' 'Now they have lost their patience. It's an absolute s--- show.' Labour MPs have described the past week as a 'deep crisis' with senior government figures forming 'circular firing squads'. One Labour MP said of the Chancellor: 'It's already clear that Rachel Reeves has lost because her whole economic and fiscal strategy is failing on numerous counts. The PM is reversing everything that she wanted to do.' A Government spokesman said: 'Our reforms to agricultural and business property relief are vital to fix the public services we all rely on. 'Three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free. 'We're investing billions of pounds in sustainable food production and nature's recovery, slashing costs for food producers to export to the EU and have appointed former NFU president Baroness Minette Batters to advise on reforms to boost farmers profits.'
Telegraph
2 hours ago
- Telegraph
Why Britain pays such a crippling price for electricity
At a vast stainless steel plant on the edge of Sheffield, Christian Brüggmann's job is to keep things running. The factory, owned by Italian manufacturer Marcegaglia, is the only one of its kind left in Britain, producing primary stainless steel used in everything from pipes to cutlery. Yet rather than focusing on production, an increasing amount of Brüggmann's time in recent years has been spent worrying about something else: sky-high electricity prices. 'It's been a roller-coaster ride ever since Covid,' says Brüggmann, the German operations chief at the facility. 'In one day now, you can have swings of £200 per megawatt hour in the price – it just creates so much uncertainty and makes it very hard to plan.' The Marcegaglia plant is more exposed than most. It uses a massive electric arc furnace to melt down scrap metal and combine it with other alloys in a large cauldron, with this mixture then poured and cast into slabs. Even turning the furnace on is a commitment, as it triggers a production process that must continue for three days, regardless of swings in the power price. Yet Brüggmann's experience is far from unique. All across Britain today, businesses and households are complaining about the seemingly unstoppable rise of electricity prices. In the Government's new industrial strategy, ministers singled out the problem as one of the biggest challenges facing domestic factories. And at the same time, regulator Ofgem has warned that higher prices are forcing more households into poverty. Ed Miliband, the Energy Secretary, blames the rise on our dependence on gas for generating electricity. His critics claim it is the Government's gung-ho pursuit of net zero that is responsible. Shocking rise At her home in Horncastle, Lincolnshire, Sheila Correll often goes from room to room to check she has turned off as many appliances as possible to avoid wasting electricity. With a weekly income of around £200 from the state pension and pension credit, she often resorts to hand-washing clothes to avoid switching on her washing machine, as she fights to keep her bills to 'as little as possible'. Yet the 83-year-old widow, who was a legal secretary before retiring, says the task only seems to be getting harder. 'Whatever I do, the electricity bill still seems so high, but I am using the minimum I can use already and there's nothing much left to live on,' she says. 'You never used to have to worry this much about electricity. Looking back, we never even really thought about it. It wasn't the way it is now.' Take a look at the numbers, and it isn't hard to see why millions of people like her are struggling. Following Russia's attack on Ukraine, energy prices surged to eye-watering levels as all of Europe scrambled for gas supplies for heating and electricity. But even with the worst of that crisis now behind us, prices remain much higher than they were beforehand. Last week, Ofgem published shocking new figures showing that household debts have breached the £4bn level for the first time, up from £1.3bn in 2020. The explanation for this is simple. Between 2019 and 2024, wages and the state pension increased by 32pc and 31pc respectively, while power prices surged 58pc for medium-sized households, according to official figures. For a typical household that consumes around 3,100 kilowatt hours (KWh) of electricity per year, this has led to an annual power bill of about £930, up from £589 in 2019, with taxes included. (A washing machine typically consumes about 1KWh of power per cycle.) Yet even the cost of abstinence has grown. In the past five years, the average standing charge for a household that consumes no electricity has also jumped from about £7 to just under £15 per month, according to regulator Ofgem. 'The standing charges are horrendous,' says Mrs Correll, in Lincolnshire. 'And with all the taxes as well, it's even worse. Without them I'd be a damn sight better off.' And it isn't just households that have had to swallow bigger costs. Businesses are arguably even worse off, with British factories paying the highest electricity prices of any developed country, according to the International Energy Agency. Their costs more than doubled between 2019 and 2023, the most recent year for which data is available. British industrial users paid 25.85 pence per kilowatt hour when taxes were included, up from 11.55 pence just four years earlier. Crucially, this was 45pc higher than in France and Germany and four times what American companies paid. In Marcegaglia's case, paying for power directly accounts for roughly 25-30pc of the Sheffield plant's outgoings, says David Scaife, the company's chief financial officer in the UK. 'We're obviously happy that electricity has dropped to lower levels than two years ago,' Scaife says. 'But prices are still much higher than they were before the pandemic. 'When we're looking at our ability to compete in the world market, that is pretty damaging. We export more than 90pc of our production, mostly to the EU and the US, both of which have pockets where power is far cheaper than it is here. 'So our competitiveness is very dependent on getting lower electricity costs.' The high price of power was recognised as 'one of the most pronounced challenges to the competitiveness of our energy-intensive sectors and the attractiveness of the UK to foreign investment', according to a government report last week released as part of the industrial strategy. In a worst-case scenario, it also puts Britain 'at risk of de-industrialisation', a report by manufacturers' body Make UK warned – a scenario that some have warned is already playing out. Between 2021 and 2024 alone, the output of heavy industrial firms such as paper mills, steel makers, glass blowers and potteries fell by a third because of high energy prices, a recent analysis by the Office for National Statistics found. And high power prices are threatening not just Britain's traditional industries but also those of the future. Under plans to reach net zero by 2050, the consumption of electricity will only become more crucial as production processes are electrified to cut carbon emissions. Yet even those at the top in Westminster struggle to fully explain just how Britain became saddled with such crippling electricity costs. When Labour's Sarah Jones, the industry minister, was quizzed about the cause on BBC Radio 4's PM programme last week, she said the full reasons 'would take all day to explain'. France, she said, was cheaper, because it had 'huge amounts of nuclear power' while Germany 'has been better historically in terms of industrial energy prices because they've put extra costs on to consumer bills'. That answer hinted at the failures of past governments to build new nuclear power stations. But it also failed to mention that nearly of a quarter of Germany's power is generated by the cheapest fuel of all: coal. However, another reason Jones was unable to unpick the cause is the sheer complexity of our energy bills. They include not just the cost of power but also a multitude of taxes, green levies and other charges that have been introduced over time. 'Growing complexity is a very serious issue,' says Michael Grubb, professor of energy and climate change at University College London. 'It's hard for politicians to understand. And that makes it easier for companies to game the system or to lobby for stuff that sounds plausible.' So how did things get like this? Hooked on gas The way our bills are constructed is key to understanding what is happening to electricity prices. Look closer, and you'll see that the amount of power you consume only accounts for about one third of your monthly bill. Another 23pc pays for grid costs such as transmission and distribution, while 20pc pays for green energy subsidies. Another 23pc is set aside for miscellaneous items such as supplier profits, operating costs, metering and bad debt provisions. 'Fundamentally, you've got the price of electricity, then you've got the costs of distributing it, and then you've got all sorts of levies and charges,' says Michael Liebreich, an independent energy consultant and investor. At the moment, the biggest single factor affecting electricity prices is gas. Following the discovery of huge gas reserves in the North Sea, the 1990s 'dash for gas' saw a string of gas-fired power plants built across Britain, and they have since become the backbone of our power grid. Before that, burning coal power plants were our biggest source of electricity. But in recent decades, successive governments have sought to phase them out with heavier taxes due to their higher carbon emissions. The rise of renewables is now pushing gas down the pecking order of the power system as well. But because of a market system called 'marginal pricing', gas still continues to influence prices heavily. Grid operators must constantly keep the supply and demand of electricity in balance at all times by continuously fine-tuning both. To decide which power plants to use on a daily basis, grid officials will work their way up a list of generators. They start with the cheapest and carry on until demand is met, eventually sourcing energy from the most expensive supplier. At the end of this process, the price paid for power is set not by the cheapest but by the most expensive. This means that even if wind, solar, batteries and other clean power sources provide the bulk of power, but gas-fired plants are used to deliver the final fraction, every generator still receives whatever the gas plant was paid. 'It could be that there's only one of these plants that's needed somewhere, and yet the whole country will pay the peak gas price, which is just insane,' says Liebreich. The driving idea behind this is efficiency, as power plant owners are incentivised to offer lower prices so they stay on the list of generators for longer. But it means consumers are being forced to pay for the rollout of supposedly cheaper renewables, while still paying the price of gas. For instance, a study in the journal Energy Reports found that in 2021, gas was used to generate around 43pc of Britain's electricity but set the national power price 97pc of the time. This dependence has also left the country vulnerable to global crises such as the Ukraine war, which sent prices soaring and prompted the Government to intervene with a massive support scheme. The renewables rollout is also leaving us more exposed to gas in other ways, too. We have not yet upgraded the power network to carry all the electricity being generated by wind farms in Scotland, so when the grid becomes too congested, we are instead switching turbines off. At the same time, grid operators will then fire up a gas plant elsewhere to make sure demand is met. This leads to huge so-called 'curtailment' compensation payments to wind farms, all of which are paid via household bills. Green contradiction Subsidies are another key driver of power prices. Successive governments have loaded energy bills with a multitude of levies, from those designed to support the rollout of clean power to those meant to help poorer households with their bills. All are expensive, says the Renewable Energy Foundation, which puts the total annual cost of energy subsidies at around £25bn. The origins go back to 1990 when Margaret Thatcher's government created the non-fossil fuel obligation, a levy on coal and gas generators. Its aim was to support privatisation of the nation's nuclear stations, which produced power so expensive that they couldn't attract buyers. The money funded guaranteed prices for their power, but the key innovation was that levy costs were passed directly to consumers – a mechanism integral to the levies driving bills up today. Of all of these, the biggest levy is the renewables obligation. This levy awarded certificates to wind, solar and other renewable generators for each megawatt hour (MWh) of power generated, on top of what they received for power. At the same time, electricity suppliers were obliged to buy the certificates to compensate for their carbon emissions. The result was a renewables gold rush, with wind farms springing up across the UK. The scheme has since been closed to new entrants but owing to the length of contracts awarded, it continues to account for £6.8bn of levies on bills. The cumulative costs since 2002 come to a whopping £67bn. In 2008, Ed Miliband, in his previous stint as energy secretary, also helped to create the feed-in tariff (FiTs) to boost small-scale renewables such as solar and low-carbon electricity generation. This pays property owners who put solar panels on their roof for every unit of power generated, even if they use the power themselves. FiTs have added a cumulative £15bn to bills. Other similar schemes include the energy company obligation and the warm homes discount. Altogether, say analysts at Cornwall Insight, such policy costs add a total of £198 to the average consumer bill per year. And those costs exclude the fastest-growing subsidy of all, contracts for difference (CfDs), under which low-carbon generators are guaranteed a fixed price for their power. This means developers can build wind farms, solar farms or nuclear power stations safely in the knowledge that, even if power markets plunge, they will be guaranteed a profit. Last year, CfD subsidies added about £2.5bn to Britain's bills – but you won't see that information set out on your power charges because they are hidden within the figures for wholesale prices. John Constable, director of the Renewable Energy Foundation, a charity which tracks the cost of such subsidies, says they now amount to costs of £25.8bn a year, or about 40pc of the total cost of supply. The sheer scale of these subsidies means it is misleading for politicians to keep blaming gas prices alone for high energy costs, argues Adam Berman, policy director at Energy UK, the trade body for energy suppliers. 'It's true that wholesale power prices are driven partly by gas,' he says. 'But wholesale power prices only account for 40 to 50pc of our bills. 'The rest is driven by additional charges, subsidies for renewable energy, and policy costs.' The combined effect of these issues has created a contradiction: renewables are supposed to bring abundant and cheap supplies of electricity, but the more we add, the more prices are going up. 'You've got to make a distinction between costs and investments,' argues Liebreich. 'We're a generation that's pouring money into our infrastructure. There will be a benefit to all this. But that's been very poorly explained to people.' How soon those benefits materialise is a crucial question, he admits. 'Saying it will be better in the 2040s is clearly not an answer.' Greg Jackson, the boss of Octopus Energy, has issued a similar warning. 'The reality is, if prices continue to go up, one day the elastic snaps,' he said recently. 'And then you call an end to investment in renewables.' In search of a solution So what can be done to bring power prices down? For environmental groups, the primary blame for high energy prices will always lie with fossil fuels. They argue that the best way to cut bills is to drive down our reliance on gas by continuing to build more renewables, but crucially, alongside battery storage and grid upgrades. One of the most influential climate groups is Ember, a London-based think tank that was called on by Labour and Mr Miliband to draft the party's plans for clean power. In particular, Ember helped to inspire the pledge for clean power by 2030 and provided the workings behind Mr Miliband's ill-conceived pledge to cut £300 from household energy bills. Josie Murdoch, an analyst at Ember, says: 'Before the energy crisis, the UK had similar electricity prices to other European countries. 'The price of electricity in the UK has remained high because the UK is over-reliant on gas for energy and grid stability, with gas almost always setting the price of electricity. 'Clean power generation and grid stabilising technologies such as batteries will free the UK from this pricing dynamic.' Prof Grubb, at UCL, says Britain could consider boosting power supplies by building more nuclear power stations, with all but one of the existing fleet set to close by the end of this decade. But nuclear plants are not cheap. They take years to build, cost tens of billions of pounds and will also generate electricity for significantly higher prices than gas plants. Not to mention that Hinkley Point C in Somerset has busted its budget several times over, and is currently forecast to cost up to £47bn. Another option being put forward is market reform. Octopus boss Jackson and Liebreich both advocate so-called zonal pricing, which would split the country's electricity market into regions. Each would have its own wholesale price. This would mean that when there is too much wind power in Scotland, prices would plummet, while in other areas, higher prices would incentivise the construction of new wind farms closer to cities. Meanwhile, the Climate Change Committee has called for ministers to take levies off electricity bills to make it cheaper for people to own electric cars and heat pumps. Yet this idea is riven with political risk, not least because ministers would have to make up the revenue either by shifting the levies to gas bills or general taxation. The Government insists that levies have successfully driven investment in renewables, reducing the UK's exposure to volatile global fossil fuel prices and protecting consumers against future price shocks. 'Through our clean power mission, we will get off the roller-coaster of fossil fuel markets – protecting business and household finances with clean, homegrown energy that we control,' a government spokesman says. Ministers have also increased financial support for energy-intensive businesses by providing relief on network charges and other fees. But Claire Coutinho, the shadow energy secretary, says that while in office she had to constantly battle with officials who wanted to add even more levies to bills. 'Cheap energy has to be our priority – otherwise we will keep offshoring British industry to China, which is just mad,' she says. In Sheffield, Marcegaglia's Brüggmann says the plant is preparing to invest in a new state-of-the-art electric furnace that will reduce electricity costs and boost production capacity. It will also benefit from the new government scheme to cut power bills. Yet even with that support, steelmakers will still face higher electricity prices than competitors in France and Germany, according to industry calculations. 'We want to produce more next year,' he says. 'We're the only producer of stainless steel still here. But what's the Government's commitment to this industry?'
