Autumn Budget 2025: our response

• UK Government to fund most of the Renewables Obligation scheme
• Ending Energy Company Obligation (ECO) funding
• Changes to EV and plug-in hybrid car tax
• Electric Car Grant extended to 2029-30
• Increased funding for EV chargepoints

The UK Government said it will introduce changes that aim to improve cost of living pressures, for example by freezing rail fares. It also aims to lower average energy bills in Great Britain by £154 a year, from April 2026. It will do this by:

• Directly funding most of the Renewables Obligation scheme
• Ending the ECO scheme

For a more detailed breakdown of what this saving looks like for different households, visit the UK Government website.

The Renewables Obligation (RO) scheme provides long-term investment for projects that generated energy from renewable sources. Although it closed to new projects in 2017, energy bills still fund those projects that were part of the scheme.

The chancellor announced that the UK Government will fund 75% of the RO scheme for 2026-2029. This means that energy bills will only contribute 25% towards the scheme, which should bring average energy bills down by £88 a year.

ECO is a scheme that helps fund energy efficient home improvements for people on low income.

The UK Government funds ECO through a charge that’s added to everyone’s energy bills, so ending the scheme should help bills come down. The scheme will now end in April 2026. But if you’re currently getting work done as part of the ECO scheme, it should still go ahead.

The UK Government says that ending ECO will lower typical average energy bills by £59 a year.

To help fill the gap left by the lack of ECO funding, the chancellor announced an extra £1.5 billion for the Warm Homes Plan. This aims to help people stay warm and save money on their energy bills. But our policy experts have concerns about the lack of a clear replacement for the scheme.

This is because the amount of funding for the ECO scheme was £6.4 billion over this parliament. So, even with the uplift to the Warm Homes Plan, this still means a reduction in the total package of funding for home upgrades.

We now need to see the publication of the Warm Homes Plan, which has been delayed. This will help us understand how the UK Government intends to meet its ambitious target of upgrading up to five million homes. This is especially important considering there’s now a reduction in the total available funding package.

All registered vehicles must pay Vehicle Excise Duty (VED, or ‘car tax’) to drive on UK roads. From April 2025, electric cars also had to start paying car tax and the amount you pay depends on when the EV was first registered.

The chancellor has now announced that, from April 2028, electric and plug-in hybrid cars will pay an extra mileage-based tax. This is called Electric Vehicle Excise Duty (eVED), and has also been called a ‘pay-per-mile tax’.

Electric car drivers will pay an extra 3p per mile. Meanwhile, plug-in hybrid cars will pay and extra at 1.5p per mile, since they still pay fuel duty on any petrol or diesel they use. Drivers will pay eVED on top regular VED, but will all be integrated into a single annual car tax payment.

Research from the Energy and Climate Intelligence Unit (ECIU) says that EVs should still be £1,000 cheaper to run per year than petrol cars.

Also, the UK Government will increase the EV Supplement threshold. Currently, new electric cars with a list price of over £40,000 pay a higher rate of car tax. From April 2026, this threshold will be raised to £50,000, which should save around £440 a year for drivers of those higher value EVs.

According to Nimblefins, the average cost of an electric car is around £46,000. So, this will be welcome news to people looking to buy their first EV.

The Electric Car Grant offers up to £3,750 off eligible EV models, making the switch to electric cars more affordable. The scheme was introduced in July 2025 and will be extended to 2029-30.

The UK Government will invest an extra £100 million into creating more EV chargepoints in homes and workplaces. This is on top of the £400 million already committed to in the 2025 Spending Review.

Responding to the 2025 autumn budget, our head of sector intelligence and external affairs, Stew Horne, said:

“While immediate action to reduce energy bills will be welcome news for many households, it’s disappointing that this choice will result in a significant reduction of the funding available to permanently lower bills and make homes warmer.

“The reality is that this budget has taken away from the total funding earmarked for upgrading people’s homes, putting fuel poverty and climate targets at risk. We now urgently need to see the publication of the Warm Homes Plan, which must set out how it will deliver home upgrades at pace to achieve the ambitious targets set out by this UK Government.”

Here’s what our policy experts would have liked to have seen in the 2025 autumn budget:

More work still needs to be done to make low carbon heating options like heat pumps an attractive offer. Even though heat pumps are more than three times as efficient as a gas boiler, electricity is four times as expensive as gas. This means that heat pumps cost about the same to run as a gas boiler, which is unlikely to encourage people to make the switch.

Removing most of the Renewable Obligation charge is a step in the right direction to help bring down energy bills. But there needs to be a longer-term shift to bring down the cost of electricity to incentivise moving to something like a heat pump.

Our experts also want to see the introduction of the Future Homes Standard, so all new homes are built with low carbon heating.

There was no mention of GB Energy in the 2025 autumn budget. Nor was there any indication of how it will support local and community power.

There are several challenges in setting up a community energy project. So, we want to see more detail from GB Energy on how it will provide support, knowledge and resources for these projects to thrive.

Our policy experts have looked at how GB Energy and the Local power Plan should support local and community power projects.

The autumn budget will change how much we pay for energy and transport over the next few years. Lower bills are welcome, but cutting funding for home upgrades could make it harder to hit climate targets and tackle fuel poverty.

Our policy experts will keep pushing for policies that make homes warmer and energy bills lower. If you want to know more, take a look at our policy reports and responses.

Sign up to Energywire, our monthly newsletter full of news, advice and tips on energy saving and renewable energy options.