Skip to main contentOn Wednesday, 26th November, UK Chancellor Rachel Reeves presented her Budget for the UK finances after weeks of speculation.
Among the headline announcements in the budget were an extension to the freeze on personal tax allowances until 2031, a new council tax surcharge on homes worth over £2m and the scrapping of the two-child benefit cap from April next year. Whilst the main focus of the Budget was to repair the government’s finances, there were several measures affecting the energy industry:
- The long-running ECO insulation levy on energy bills will be abolished when the current four-year scheme expires in March 2026, along with a 75% reduction in the domestic portion of the renewables obligation (RO) scheme in 2026-27, 2027-28 and 2028-29. These costs will move to general taxation instead, with the government estimating these measures will cut the average household energy bill by around £150 from April, although non-domestic consumers will be unaffected by this policy.
- Confirmation of the government’s decision to fund construction of the Sizewell C nuclear power plant using a regulated asset base (RAB) model, which will levy an additional charge on consumer energy bills to contribute to financing costs. The levy is projected to generate receipts of £0.7 billion in 2026-27, the first full year of the levy, rising to £1.4 billion in 2030-31.
- There will be a new mileage-based charge on electric and plug-in hybrid cars from April 2028 to fund road maintenance and EV charging infrastructure, although the VED Expensive Car Supplement will be raised from £40,000 to £50,000 from April 2026. Fully electric cars will be charged 3p per mile with plug-in hybrids charged at 1.5p per mile, raising £1.4 billion by 2029-30. The government calculates that the new mileage-based charge on electric cars will offset around 25% of the revenue set to be lost from fuel duty by 2050 due to the transition to electric vehicles.
- Confirmation of an additional £1.3bn of funding for the Electric Car Grant, providing buyers with up to £3,750 off the upfront cost of a new car, taking total Government backing for the scheme to £2bn and extending its duration to 2030.
- £200m of additional Government funding to increase EV charging infrastructure, as well as a 100% business rates relief for EV charger installations.
- A freeze to fuel duty for a further five months, followed by staged increases from 2026, costing £2.4bn next year and £900m each year afterwards.
- Further support for local supply chains to be integrated into plans for the Wylfa Small Modular Reactor in North Wales, as well as £14.5m for a new low-carbon industrial centre in Grangemouth, Scotland, and support for “critical minerals, renewable energy and marine innovation” in Cornwall.
As part of the supporting documentation to the Budget, the government also confirmed an uplift in relief for over 500 energy intensive businesses through the Network Charging Compensation Scheme (NCC) 90% from April 2026, as well recapping its announcement for the British Industrial Competitiveness Scheme (BICs) which it calculates will reduce electricity costs by c.£35-40/MWh for eligible businesses in the manufacturing, automotive, aerospace and chemical sectors from 2027. The Department for Business and Trade has just launched its consultation to determine design and eligibility for the scheme and is seeking stakeholder engagement before the consultation closes in January next year.
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