On 26 November 2025, the Chancellor delivered the autumn budget, announcing changes to tax and spending1. The UK Government said the measures aim to lower average energy bills in Great Britain by £154 a year from April 2026, achieved by directly funding most of the Renewables Obligation scheme and ending the Energy Company Obligation (ECO)1.
The Renewables Obligation supports projects that generated energy from renewable sources. It closed to new projects in 2017, but energy bills still fund those projects that were part of the scheme1. The Chancellor announced that the UK Government will fund 75% of the RO scheme for 2026-2029, meaning energy bills will only contribute 25% towards it, which should bring average energy bills down by £88 a year1.
ECO funds energy efficient home improvements for people on low income and is paid for through a charge added to everyone's energy bills1. The scheme will now end in April 2026, and the UK Government says ending it will lower typical average energy bills by £59 a year1. Work already under way through ECO should still go ahead1. To help fill the gap, the Chancellor announced an extra £1.5 billion for the Warm Homes Plan, which aims to help people stay warm and save money on their energy bills1. Energy Saving Trust said ECO funding amounted to £6.4 billion over this parliament, so even with the uplift the total package for home upgrades is reduced1. The Warm Homes Plan has been delayed, and the UK Government's stated target is upgrading up to five million homes1.
On motoring, from April 2028 electric and plug-in hybrid cars will pay an extra mileage-based tax, called Electric Vehicle Excise Duty1. Electric car drivers will pay an extra 3p per mile and plug-in hybrid cars an extra 1.5p per mile, since they still pay fuel duty on any petrol or diesel they use1. It will be paid on top of regular Vehicle Excise Duty but integrated into a single annual car tax payment1. The EV Supplement threshold, currently applying to new electric cars with a list price over £40,000, rises to £50,000 from April 2026, which should save around £440 a year for drivers of those higher value EVs1. The Electric Car Grant, introduced in July 2025 and offering up to £3,750 off eligible models, will be extended to 2029-301. An extra £100 million goes to EV chargepoints in homes and workplaces, on top of £400 million committed in the 2025 Spending Review1.
| Measure | Change | Date |
|---|---|---|
| Renewables Obligation | Government funds 75%, bills 25%; £88 a year off average bills | 2026-2029 |
| ECO | Scheme ends; £59 a year off typical average bills | April 2026 |
| Warm Homes Plan | Extra £1.5 billion | Announced 26 November 2025 |
| Electric Vehicle Excise Duty | 3p per mile for EVs, 1.5p for plug-in hybrids | April 2028 |
| EV Supplement threshold | Raised from £40,000 to £50,000; about £440 a year saved | April 2026 |
| Electric Car Grant | Extended | To 2029-30 |
"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."
Why it matters for households
The bill reductions come from moving costs off household bills rather than from changing how energy is used. The £88 from the Renewables Obligation and the £59 from ending ECO are both reductions in levies added to bills, so they lower the standing cost of supply without altering a home's consumption. The £154 total is an average for Great Britain and individual bills will vary; the sources do not give a breakdown by nation, region or household type.
The funding change matters more for homes that need physical improvement. ECO paid for insulation and other efficiency measures for low income households, and the sources state that the replacement funding is smaller than what it replaces. Energy Saving Trust notes that the budget has taken away from the total funding earmarked for upgrading people's homes, putting fuel poverty and climate targets at risk1. For a household, the practical difference is between a lower bill now and a home that needs less energy in the first place. The sources do not report what will replace ECO for individual applicants, and no eligibility detail for the Warm Homes Plan has been published.
On transport, the mileage charge adds a running cost that scales with distance driven, while the higher supplement threshold reduces annual car tax for more expensive EVs. Energy Saving Trust cites research from the Energy and Climate Intelligence Unit saying EVs should still be £1,000 cheaper to run per year than petrol cars1. The sources do not report how the mileage charge will be recorded or collected.
What happens next
ECO ends in April 2026, and the EV Supplement threshold rises the same month1. Electric Vehicle Excise Duty begins in April 20281. The Electric Car Grant runs to 2029-30 and the Renewables Obligation funding arrangement covers 2026-20291. The Warm Homes Plan has been delayed and no publication date is given in the sources1. Energy Saving Trust also notes there was no mention of GB Energy or the Local Power Plan in the budget1.
Sources2 cited
- Autumn budget 2025: our response - Energy Saving Trust, energysavingtrust.org.uk
- Autumn budget 2025: our response - Energy Saving Trust, energysavingtrust.org.uk