Conservatives announce new plans to drill in the North Sea to cut bills by £200

Today [Monday 30^th March 2026], as Kemi Badenoch visits Aberdeen and an oil rig in the North Sea, the Conservative Party is going further in its pursuit of cheap energy with new plans to cut bills.

The Party has already set out plans to axe costly green levies and taxes which push up everyone's bills, including the Renewable Obligation subsidy and the Carbon Tax on electricity generation, to lower electricity costs for families and businesses.

Now, facing external energy shocks from the ongoing war in the Middle East and a Labour Prime Minister that is too weak to stand up to Ed Miliband's Net Zero ideology, the Conservatives are setting out new measures to ease the cost of living.

The new Conservatives' Cheap Power Plan would remove VAT from household energy bills for the next 3 years, providing immediate relief for consumers, and with an average saving of £94 per household per year. This measure is designed to give the British public a cushion against external shocks and the security of lower bills immediately whilst we Get Britain Drilling, increasing our domestic oil & gas production to raise tax revenue.

The Cheap Power Plan will be funded by scrapping various taxpayer-funded Net Zero schemes, including Ed Miliband's GB Energy, heat pump subsidies, and abolishing the Renewable Obligation subsidies currently being funded through general taxation. Increased oil and gas production in the North Sea will generate billions of pounds in tax revenue which can be used to reduce the tax burden and ease the cost of living.

We are calling on the Labour Government to introduce our plan immediately, putting the British public first as prices rise and consumers pay the price for Starmer, Reeves and Miliband's recklessness.

To bring bills down, the Conservatives' new Cheap Power Plan will:

1. Take VAT off domestic energy bills

Households are under pressure from global energy shocks and rising prices, and the UK already has the highest energy prices in the developed world. That is why the Conservatives would take VAT off energy bills for the next three years, allowing relief for consumers whilst we introduce our policies to unlock cheaper energy from increased domestic production.

Removing VAT from domestic energy bills would provide immediate, visible relief, cutting a further £94 from the average household's costs based on forecasts for the July 2026 price cap – which is why we are today calling on Labour to do this immediately.

This is a straightforward, practical step that would put money back into people's pockets without delay.

1. Axe the Carbon Tax on electricity generation

The Carbon Tax makes up around a third of the wholesale price of electricity and makes electricity artificially expensive. It was designed to drive coal off the system, but since we no longer use coal and we need gas as reliable power to keep the lights on, it simply pushes up the price of gas, wind, solar, and nuclear too.

Gas remains essential to keeping the lights on and balancing intermittent renewables. Axing the Carbon Tax on electricity generation will deliver immediate relief, cutting bills by around £75 for the average household and reducing costs right across the economy.

1. Scrap Ed Miliband's old wind subsidies (Renewable Obligation levy)

This green levy pays massive subsidies to wind developers, with some wind farms paid up to three times the market price of electricity, funded through extra charges on everyone's bills.

Labour's November 2025 Budget temporarily moved 75 per cent of the Renewable Obligation subsidy levy from domestic bills into general taxation from 2026 to 2029. That may show up as a reduction on the face of the bill, but it does not remove the cost of these extortionate subsidies from the energy system. Labour's policy simply moves the cost from someone's energy bill to their tax bill.

Labour's change also does nothing to reduce the cost of this renewable subsidy scheme to businesses like cafes, pubs, restaurants, and small manufacturers, as the temporary cut only applies to households.

We would scrap the Renewable Obligation subsidies entirely, with the 25% which remains on household bills saving £22, and freeing up money that the Chancellor is currently using to pay them through general taxation.

1. Get Britain Drilling - Back British Oil and Gas to cut bills

The Labour Party claim that more drilling in the North Sea won't take a penny off bills. This is nonsense. The British oil and gas industry could provide billions of pounds of tax revenue that the Government could use to cut taxes and cut bills. The industry just needs the Government to get out of the way and let them drill. The Conservatives are campaigning to Get Britain Drilling.

Britain relies on oil and gas for around three-quarters of its energy needs, and we will need oil and gas for decades. Choosing not to produce oil and gas here in Britain won't mean we use any less, we will just import more gas from foreign countries instead – sending jobs, tax revenue and investment abroad while Britain's economy suffers. Making LNG and shipping it to the UK also means higher emissions. This was a terrible idea before the war in Iran, but Labour blocking domestic energy production during an energy supply crisis is unforgivable. Others are not following suit. Last year, Norway's Labour Government drilled 49 wells in the North Sea. For the first time since 1964, Britain drilled no wells.

The Conservative Party are calling for an end to Labour's ban on new oil and gas licences, an end to the Energy Profits Levy which is blocking investment, and for the Government to use those tax revenues to cut bills.

Taken together, our plan would take £200 off energy bills on average over the rest of the Parliament.

Labour promised to cut household energy bills by £300, but bills have risen by £73 since taking office and they are set to increase further because of Ed Miliband's Clean Power 2030 target.

The UK has already halved its emissions since 1990, reducing emissions by more than any other major economy. But global emissions are rising and countries like China are not following our lead. Continuing down this path of higher energy bills, job losses, and lower economic growth will make us a warning, not an example, to the rest of the world. We must put cheap, reliable energy and a stronger economy first.

This approach reflects the Conservative Party's commitment to delivering the cheap, reliable energy families and businesses need to power a stronger economy.

In contrast to Reform, the Conservatives' Cheap Power Plan is fully funded, with a clear plan of where savings will be made.

Kemi Badenoch MP, Leader of the Conservative Party, said:

“I know families and business owners across Britain will be very worried about how the global energy crisis will impact them. That's why I find it appalling that Labour's solution is to tax working people to fund a bailout for those on benefits.

“By drilling in the North Sea and scrapping Ed Miliband's crazy green taxes, our Cheap Power Plan would reduce bills by £200 for everyone.

“Only the Conservatives have the plans and the team to deliver cheap energy, a stronger economy and a stronger country.

Claire Coutinho MP, Shadow Energy Secretary, said:

“Labour promised to cut energy bills by £300 but they are still higher than when they took office. Instead, Ed Miliband is blocking drilling in the North Sea during an energy crisis and Rachel Reeves is hiking taxes on working families to pay the energy bills of those on benefits.

“The Conservatives would use extra tax revenue from our plan to Get Britain Drilling in the North Sea to cut taxes and ease the cost of living. Our Cheap Power Plan would scrap VAT on energy bills and cut bills by £200 for every family.”

“Ed Miliband is taxing industry into the ground and making everyone poorer through higher bills. We have to put cheap energy first.”

ENDS

Notes to Editors:

The Conservatives will take VAT off domestic energy bills for the next three years:

• We would cut the average electricity bill by £94 by removing VAT from energy bills for households for the next three years. Based on Cornwall Insight forecasts of the energy price cap for July 2026, removing the 5 per cent VAT levied on bills would save £94. HM Treasury has previously costed this measure at £2.2 billion. Over the next three years, this could be funded by ending renewables subsidies, 75% of the cost of which Labour shifted onto taxpayers at the Budget. (Cornwall Insight, accessed 27 March 2026, link; HMRC, Non-structural tax relief statistics (December 2024), 5 December 2024, link).

The Conservatives will Axe the Carbon Tax on electricity generation:

• The Conservatives will axe the Carbon Tax for electricity generation, cutting the average electricity bill by £75. The Carbon Tax (the Emissions Trading Scheme (ETS) and Carbon Price Support (CPS)) will be scrapped for electricity generation. This will reduce wholesale electricity prices by around 30 per cent, or around £26 per MWh. The ETS and CPS are taxes that are charged on gas power stations when they generate electricity, which are passed straight through to households and businesses in their energy bills (Conservative Party Analysis of DESNZ data, 26 September 2025).

The Conservatives will scrap Ed Miliband's old renewable subsidies:

• The Conservatives will scrap Ed Miliband's extortionate old renewable subsidies, cutting electricity bills by £22 and saving taxpayers money. The Renewable Obligation Certificate (ROC) scheme pays subsidies to wind and solar farms and other renewable generators, who are paid up to three times the market price of electricity. These subsidies are paid by every household and almost all businesses through their electricity bills and partially through taxation. The ROC subsidies are reliant on primary legislation, meaning they can be stopped at any point (Ofgem, Policy cost allowance methodology, accessed 27 March 2026, link).

The Conservatives will Get Britain Drilling, backing North Sea oil and gas and using the revenues to cut the cost of living for households:

• The Conservatives will back the North Sea to generate billions in additional tax revenue a year. Analysis by independent investment bank Stifel has shown that the Energy Profits Levy and ban on new licences is making the basin uninvestable, losing the Exchequer £25 billion in tax revenue over the next ten years (Stifel, Written Evidence to ESNZ Select Committee, January 2026, link). Work by Offshore Energies UK also finds that ending the ban on new North Sea fields could yield billions in tax revenues.  These revenues will create the opportunity to keep taxes and bills lower over the long term.

The Conservative Party will back the North Sea:

• Repealing the ban on new oil and gas licences to unlock 2.9 billion barrels. Labour's ban on new oil and gas licences called time on Britain's oil and gas industry leaving 2.9 billion barrels in the ground and risking 200,000 jobs. We will extract this oil and gas, creating £165 billion in economic value (OEUK, Key facts, accessed 31 August 2025, link; OEUK, Press Release, 23 June 2025, link).

• Repealing the Energy Profits Levy to maximise investment in British oil and gas production. The Energy Profits Levy, an additional 38 per cent levy on the upstream production of oil and gas, is set to expire on 31 March 2030. The Conservatives have pledged to remove it once elected and called on the government to remove it immediately (HMRC, Policy Paper, 30 October 2024, link).

• Replacing the North Sea Transition Authorities (NSTA) mandate to ‘maximise the extraction of our oil and gas'. The NSTA requires oil and gas companies to fulfil a range of net zero obligations such as connecting oil rigs to the grid and reducing flaring, venting, and emissions. We will change this to one sole mandate of maximising oil and gas extraction and rename the NSTA to the North Sea Authority (The Daily Telegraph, 30 August 2025, link).

• Reversing the ban on government support for the export of oil and gas technology to unlock billions in oil and gas technology exports. UK Export Finance (UKEF) supported on average £5 billion of oil and gas technology exports annually before government support for it was banned. We will reverse this ban to create jobs and unlock billions of exports (The Daily Telegraph, 30 August 2025, link).

Labour and Reform do not have a plan to cut energy bills for business:

• Labour's energy bill reduction measure did nothing to support business, instead only moving costs from household bills to general taxation. At the Spring Statement, the Chancellor announced a package which included an £88 saving by moving 75 per cent of the cost of ROCs onto general taxation from energy bills for households and a £59 saving by not renewing the Energy Company Obligation which was funded through a levy on household bills (HMT, Budget 2025, 28 November 2025, link).

• Reform are flip flopping over whether to nationalise the North Sea. Reform's contract with the people committed the party to nationalising ‘critical national infrastructure', including bringing 50 per cent of each utility into public ownership. Just last week, the Financial Times reported that Reform has dropped its pledge to nationalise strategic industries, despite pledging to take part ownership of Rolls Royce (The Financial Times, 25 March 2026, link).

• Reform said they would ‘wipe out shareholders' when nationalising businesses, wiping out people's hard earned savings and pension. FARAGE: ‘Water's a different case. That's Thames Water, who have lost all credibility, morally and financially. And our plan was, as I say, it wouldn't cost us anything. We'd wipe out the shareholders and look for new partners' (Reform Press Conference, 3 November 2025, archived).

• Reform UK dropped their half-baked energy plan that would drive up costs for households and businesses. In February 2025, Reform UK announced a half-baked plan to impose a ‘windfall tax on all renewable generated power', ‘a solar farm tax' – tax increases that would have been passed on to households and businesses at a time when our domestic and industrial prices are among the highest in the world (Reform UK, Reform UK's Renewable Warning, 12 February 2025, archived; DESNZ, Energy Prices: International Comparisons, 30 September 2025, link). 

Energy bills are up by £73 under Labour:

• The energy price cap has increased by £73 since Labour came to power, despite their promise to cut bills by £300. The energy price cap for July to September 2024 was £1,568 compared to £1,641for April to June 2026, a £73 increase (Ofgem, Energy Price Cap, accessed 7 August 2025, link).