The Chancellor of the Exchequer delivered the Government's second Budget since taking office on 26 November, setting out measures that affect household energy efficiency funding and the make-up of electricity bills1. The Energy Company Obligation (ECO), which has required energy suppliers to fund energy efficiency improvements for eligible households and small businesses for more than a decade, will end in April 20261.
The Budget adds £1.5 billion to the Warm Homes Plan, taking its total allocation to more than £14 billion1. The plan itself has still not been published, and the Budget did not confirm a replacement for ECO1. The National Audit Office has previously reported that up to 98% of insulation installations inspected under the scheme were defective and required remedial work1.
On bills, the Government will offset 75% of the legacy Renewables Obligation cost from electricity bills1. The Renewables Obligation is a closed support scheme whose costs still appear on household electricity bills. The Budget also protects the Boiler Upgrade Scheme and states an intention to explore reduced electricity costs for manufacturers and other energy-intensive sectors1.
| Measure | Detail |
|---|---|
| ECO | Ends April 2026, no replacement confirmed |
| Warm Homes Plan | Extra £1.5 billion, total above £14 billion |
| Renewables Obligation | 75% of legacy cost offset from electricity bills |
| Boiler Upgrade Scheme | Remains protected |
Sam Baptist, Head of Government Affairs at CIBSE, 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."
The Budget also freezes tax thresholds until 2030-31, introduces a council tax surcharge for properties valued at £2 million or above from 2028, and sets a 3p per mile charge for electric vehicles from 20281. Funding packages for devolved administrations include £820 million for Scotland, £505 million for Wales and £370 million for Northern Ireland1.
Why it matters for households
ECO has been a route to supplier-funded insulation and heating upgrades for eligible homes, and its current phase closes in April 2026 with no successor scheme named in the Budget1. Households that might have qualified for support have no confirmed replacement to plan around, and the published statistics on delivery under the scheme will end with it.
The Warm Homes Plan's larger allocation signals continued public funding for retrofit, but until the plan is published, which measures it covers and who qualifies have not been reported1. The 75% offset of legacy Renewables Obligation costs addresses a long-standing gap between electricity and gas prices, which affects the running-cost case for electrified heating such as heat pumps1. For a home's energy independence, the practical effect is that the cost of the electricity a household uses, and the availability of grant funding for efficiency measures, are both being reshaped at once, with the funding side less certain than the bill side.
What happens next
ECO ends in April 20261. The Warm Homes Plan has not been published, and no date for publication has been reported1. A consultation on the council tax surcharge for properties valued at £2 million or above is due early next year, and the 3p per mile electric vehicle charge and the surcharge both take effect from 20281.