Is 'net zero' and the Green Levy stifling growth in the UK economy? If you believe the gossip, the answer may surprise you

Is ‘net zero’ and the Green Levy stifling growth in the UK economy?

Is ‘net zero’ and the Green Levy stifling growth in the UK economy?  The question was put to This Writer, out of the blue, in response to discussion of the planned changes to UK state benefits – so I had to find out about it, didn’t I?

Here’s the original question, as it was put to me:

“The current pursuit of net zero with an unrealistic fix date timetable is stifling growth via the green levy which is taking hundreds of pounds from the public and adversely affects the poorest in society.

“The economy won’t grow if people haven’t got money to spend and bills keep rising.

“The government gets less revenue from a stagnating economy so it either need to raise taxes, which is self defeating, borrow more money, which leads to higher debt servicing costs or cut the welfare state.

“We, as a country, are simply giving away our industrial base and much needed jobs to China, all in the name of net zero!”

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Let’s break it down and assess what’s accurate, what’s debatable, and what’s misleading.

“The pursuit of net zero with an unrealistic fix date timetable is stifling growth via the green levy, taking hundreds of pounds from the public and affecting the poorest” – partially true but oversimplified.

The green levy, which funds renewable energy projects and social/environmental programmes does add to energy bills, but it accounts for a small fraction of total costs.

The main drivers of high bills are global energy prices – especially gas, supply chain disruptions and infrastructure costs.

Cutting the green levy would not significantly lower bills, as gas prices are the bigger issue. If we had invested more in domestic renewables earlier, we would be less exposed to fossil fuel price spikes. In fact, investing in domestic renewables could make energy cheaper in the long run. Cutting green investment now could leave us even more dependent on expensive gas imports.

It is fair to say that lower-income households disproportionately feel the impact of rising energy costs, but solutions like targeted subsidies or insulation programs, rather than scrapping net zero policies, could address this.

“The economy won’t grow if people haven’t got money to spend and bills keep rising” – this is largely true.

High energy costs reduce disposable income, lowering consumer spending, which slows economic growth – but abandoning net zero wouldn’t fix that.

The biggest factor behind the UK’s stagnating growth isn’t just net zero policies—it’s also productivity issues, Brexit-related trade frictions, and underinvestment in key sectors.

Energy efficiency improvements – insulation, heat pumps, renewables, investment in green technology – could actually reduce long-term household energy costs, freeing up money for spending. And it could create new jobs.

“The government gets less revenue from a stagnating economy, so it either needs to raise taxes, borrow more (raising debt costs), or cut welfare” – this is partially true, but ignores other options.

A stagnating economy means lower tax revenue. However, there are more choices than just tax hikes, borrowing, or cutting welfare:

  • Investment in green tech can create jobs and boost growth.
  • Fairer taxation – wealth taxes or windfall taxes on energy companies – could generate revenue without harming the poor.
  • Monetary policy (interest rates) also plays a role in economic conditions.

“We’re giving away our industrial base and jobs to China in the name of net zero” – misleading.

The decline of the UK’s industrial base began decades before net zero policies, due to offshoring to cheaper labour markets (not just China but India, Eastern Europe and other parts of the world); lack of investment in domestic manufacturing; and a shift to a service-based economy since the 1980s.

China does dominate green technology (solar panels, batteries, and so on), but the UK could build its own green industry, including battery technology and sustainable manufacturing to create jobs at home instead of relying on imports.

The real issue isn’t net zero policies themselves – it is that the UK isn’t investing enough in domestic green industries to create jobs at home. We need to manage the transition.

There are valid concerns about the cost of net zero transitions, especially for lower-income households, but blaming net zero entirely for economic stagnation is misleading. Many other factors – Brexit, energy market volatility, underinvestment in UK industry – play a bigger role.

The solution isn’t abandoning net zero, but managing the transition better – investing in homegrown green industries, ensuring a fair distribution of costs, and protecting vulnerable households.

Simply rolling back net zero won’t fix the economy—but doing it right could create jobs, lower bills, and boost UK growth.


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