Autumn budget 2026: our response

• Extending the VAT cut on domestic electricity bills to July 2027
• £100 payments for households in council tax bands A-D in England from January 2027
• Removing the standing charge for gas from 2027 and reforming electricity standing charges
• Reforming the energy system to help reduce energy bills
• Setting up a new Energy Debt Circuit Breaker to help tackle energy debt
• Scrapping a planned new tax on gas bills
• Up to 25% off energy-intensive manufacturing firms’ energy bills through the British Industrial Competitiveness Scheme from April 2027
• Cuts to Warm Homes Plan funding (including the Boiler Upgrade Scheme)

The UK Government said its top priorities include tackling the cost of living while building energy and national security.

It said that it wants to give families and businesses breathing space now but also plans longer term reform to reduce future energy bills.

It remains committed to the UK reaching net zero 2050 while reducing energy costs so they are more in line with countries across Europe. The UK Government said its priority of providing cheaper, clean energy is key to achieving this.

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

Here is a breakdown of what was announced:

The VAT cut on household electricity bills has been extended to July 2027. This will take around £50 off the Ofgem energy price cap in April 2027.

Originally introduced on 1 October 2026, the cut was due to end in April 2027.

The UK Government has announced a further £2.6 billion of support through the Household Energy Payment to help households with the rising cost of energy.

Up to 20 million households in England will receive a direct £100 payment from January 2027. This payment is targeted at homes in council tax bands A-D.

The devolved governments will receive their share of this funding via the Barnett formula.

The temporary increase in the Bank Corporation Tax Surcharge will help pay for this support.

The UK Government is getting rid of the gas standing charge from all tariffs from 2027. The standing charge is a daily fee that covers infrastructure, meter readings and network maintenance which households pay regardless of how much energy they use.

It also announced plans to reform the electricity standing charge, with more details coming in 2027.

The UK Government also wants to bring energy costs down in the long term. To do this, it wants to reform the energy system and address some factors that can help control the cost of energy. This includes:

• adding no new policy costs on bills until a comprehensive Cost Control Framework is in place at the spending review in 2027
• prioritising a cheaper energy mix and only procuring new generation where it lowers bills, benefits the system, and can be accommodated by the grid
• progressing next steps in breaking the link between gas and electricity

This will be part of the UK Government’s new debt strategy. This aims to prevent debt building up and plans to offer a one-off targeted debt relief scheme for eligible homes.

The UK Government expects this to save all billpayers around £30 by 2030.

The planned Gas Shipper Obligation levy won’t be added to gas bills. Instead, the UK Government will fund the costs of hydrogen projects rather than households paying towards it through their energy bills.

The UK Government will launch the British Industrial Competitiveness Scheme, giving 10,000 energy-intensive manufacturing firms a 20-25% discount on electricity bills. This will start in April 2027, but firms will also get a backdated payment for 2026-27.

We’ve also seen some cuts in this budget, with the Warm Homes Plan losing around £1 billion in capital funding.

Most of this reduction will fall on the Boiler Upgrade Scheme. The Scheme, which helps people switch from fossil fuel heating to low carbon alternatives like heat pumps, is set to lose around £720 million.

Low-income schemes, such as social and local grants, are also set to lose around £180 million from 2028 onwards. And spending on heat networks (also called district heating) will be cut by £100 million this financial year.

Responding to the 2026 autumn budget, our group head of sector intelligence and external affairs, Stew Horne, said:

 “Affordable energy is a basic necessity, yet at the moment too many households are still being forced to make difficult choices just to keep their homes warm. We’re pleased to see the Chancellor recognise that keeping energy bills down remains an urgent priority.

“The confirmed extension of VAT removal from electricity bills and the £100 Household Energy Payment will take some pressure off households struggling with high energy bills. The removal of the gas standing charge could also provide much-needed relief for low income households with low energy use. However, as it will not benefit all low income households, it’s welcome that additional support has been proposed for those with higher energy consumption.

“The UK Government also missed an opportunity to lower electricity prices further by removing levies from domestic electricity bills. Reducing these costs would provide immediate relief for households, encourage the uptake of low carbon technologies and reduce dependence on volatile fossil fuels. Although removing gas standing charges are a step in the right direction, households won’t feel the impact of the change this winter.

“We’re disappointed by the planned cuts to the Warm Homes Plan. While the Warm Homes Loan Scheme announced yesterday is a positive step and will help more households to install low carbon technologies, reducing the budget available for the Boiler Upgrade Scheme risks sending the wrong message to homes and industry at a time when increasing uptake of low carbon heating technologies like heat pumps will increase the whole nation’s resilience to future price shocks.

Before the budget, the UK Government approved production at Jackdaw gas field. It claimed this would boost energy security. At the same time, the UK Government announced a new £2 billion Energy Wealth Fund, with future revenues from the North Sea set to go into the fund.

Reacting to the announcement, Stew Horne said:

“Doubling down on fossil fuels won’t lower energy bills or improve long-term energy security. The real route to energy security is to reduce our dependence on volatile fossil fuel markets and invest in warmer, more efficient homes powered by low carbon technology.”

Here’s what our policy experts hoped to see in the 2026 autumn budget:

The Plan is crucial to meeting the UK Government’s ambition to upgrade five million homes by 2030, permanently bringing down energy bills and reducing our dependence on volatile fossil fuels.

Therefore, we’re disappointed to see around £1 billion cut from the Plan.

Deliver this support alongside allocating funding to accelerate home upgrades for those in fuel poverty, to help make homes warmer and more affordable to heat.

We’re pleased to see the Chancellor recognise that keeping energy bills down remains an urgent priority, particularly for those on the lowest incomes.

This will help to reduce household energy bills and encourage more people to switch to low carbon heating technologies, like a heat pump.

We recently co-signed a letter asking the Chancellor to remove hidden costs from electricity bills.

While we’re pleased to see the UK Government taking steps in this direction with the Cost Control Framework and review of levies, we would have liked the UK Government to go further and take action to remove policy costs from electricity bills.

The UK Government also launched the Warm Homes Loan Scheme. The Scheme provides loans to help homes install clean technology like heat pumps, batteries and solar panels.

Find out more about the Warm Homes Loan Scheme.

The autumn budget will change how much we pay for energy over the next few years. Support for bills in the short-term are welcome as we head into a difficult winter. However, cutting funding for home upgrades risks slowing down the shift to cleaner energy and lowering household bills for good.

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.

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