The Chancellor of the Exchequer delivered the Government's second Budget since taking office on 26 November 2025, setting out measures that affect household energy efficiency funding, electricity prices and heating costs1.
The Energy Company Obligation (ECO), which for more than a decade has required energy suppliers to fund energy efficiency improvements for eligible households and small businesses, will end in April 20261. No replacement scheme has been confirmed. The Warm Homes Plan will receive an extra £1.5 billion, taking its total allocation to more than £14 billion, but the Plan itself has still not been published1. The Budget also confirms that the Government will offset 75% of the legacy Renewables Obligation cost from electricity bills, and that the Boiler Upgrade Scheme remains protected1.
On tax and property measures, the Budget sets a council tax surcharge for properties valued at £2 million or above from 2028, with a consultation in early 2026, and a higher-value business rates multiplier for properties with a rateable value above £500,000 from April 20261. A 3p per mile charge for electric vehicles will be introduced from 20281. Tax thresholds remain frozen until 2030 to 311. Additional funding for devolved and local government includes £505 million for Wales, £820 million for Scotland, £370 million for Northern Ireland and £13 billion for metro mayors1.
On skills, SMEs hiring apprentices up to age 25 will be fully funded, with a further £725 million for the Growth and Skills Levy and £820 million for the Youth Guarantee for 18 to 21 year olds1. Funding for 350 new planners in England will come through the Pathways to Planning Graduate Scheme1.
CIBSE Head of Government Affairs Sam Baptist said:
"Overall, this Budget offers a mixed picture for building services and the wider built environment. Shifting policy costs away from electricity bills is welcome and should help incentivise more homeowners and businesses to transition to clean heat. Protecting the Boiler Upgrade Scheme and providing additional investment for the Warm Homes Plan is also positive - however, we are still waiting for the Plan to be published. With the ECO scheme coming to an end, the Warm Homes Plan needs to set out how it will deliver energy-efficient and low-carbon homes at scale."
Why it matters for households
ECO has been a route to funded insulation and heating upgrades for eligible homes, so its closure in April 2026 removes a funding channel without a confirmed successor1. The extra £1.5 billion for the Warm Homes Plan increases the money available, but the Plan's contents and how it will direct funding to low-income households and small businesses have not been reported1. Offsetting 75% of the legacy Renewables Obligation cost from electricity bills reduces the gap between electricity and gas prices, which affects the running cost comparison between a heat pump and a gas boiler1. The Boiler Upgrade Scheme, which provides grants towards heat pump installation, remains protected1. Council tax and business rates changes apply to higher-value properties and larger premises rather than to typical homes1.
What happens next
The Energy Company Obligation ends in April 20261. The higher-value business rates multiplier takes effect from April 20261. A consultation on the council tax surcharge for properties valued at £2 million or above is due in early 2026, with the surcharge from 20281. The 3p per mile electric vehicle charge starts in 20281. The publication date of the Warm Homes Plan has not been reported1.