Energy Bills

Immediate bill relief and long-term energy reform

Mr Healey, Chancellor of the Exchequer, described the Budget as a shift in the Government’s energy policy, responding to the impact of the conflict in the Middle East on household and business bills. He said the Budget would provide immediate financial support and introduce longer-term reforms to improve the energy system for households and businesses.

He highlighted progress towards clean power, arguing that the next priority is to unlock cheaper electricity, reduce bills and support the UK’s reindustrialisation. The Chancellor emphasised the need to manage energy costs carefully while investing in the infrastructure required to strengthen energy security, protect households and businesses from volatile international gas prices and expand a grid that has failed to keep pace with demand.

He described the Autumn Budget as the start of a new approach to energy, which the Government’s 10-Year Plan would build on, with cheaper energy intended to improve business competitiveness and give households greater financial breathing space. He added that cheaper electricity would encourage electrification, strengthen energy security and help decarbonise the wider economy.

Measures to support households and businesses:

•   Household energy support: Extend the VAT cut on electricity until July 2027, which is expected to reduce the annual Ofgem price cap by around £50 in April 2027. The Government will also introduce a £2.6 billion Household Energy Payment, providing £100 directly into bank accounts for eligible households in England in council tax bands A to D from January 2027, supporting up to 20 million households. Devolved governments will receive their share of funding via the Barnett formula. The package will be partly funded by a temporary increase in the Bank Corporation Tax Surcharge from 3% to 6% for 15 months, from 1 January 2027 to 31 March 2028.

•   Fuel duty and road tax: Extend the 5p fuel duty cut and freeze, alongside the Heavy Goods Vehicle (HGV) road tax holiday, until 1 July 2027. This will keep fuel duty at its lowest level for more than 16 years and substantially lower in real terms, while the red diesel rate remains at its lowest level for more than 20 years.

Longer-term reforms intended to reduce energy costs and provide greater certainty for consumers and businesses:

•   Controlling energy costs: No new policy costs will be added to energy bills until a comprehensive Cost Control Framework is established at the 2027 spending review. The framework will set budgets for the various components of energy costs, including policy costs.

•   Prioritising cheaper energy: New electricity generation will be procured only where it reduces bills, benefits the energy system and can be accommodated by the grid.

•   Reducing exposure to gas prices: A consultation on wholesale Contracts for Difference will be published alongside the Budget, outlining the next steps to reduce the impact of gas prices on electricity bills. These contracts fix the price paid to certain renewable energy projects and are intended to help protect households and businesses from volatile gas prices.

From 2027 onwards, Mr Healey said the Government would introduce further measures to reduce costs:

•   British Industrial Competitiveness Scheme: Offer 10,000 energy-intensive manufacturing firms a 20% to 25% discount on electricity bills from April 2027, including backdated support for 2026/27.

 •   Gas standing charges: Abolish gas standing charges, with targeted measures to ensure the change is implemented fairly.

 •   Energy Debt Circuit Breaker: Introduce a new mechanism to tackle energy debt, expected to save all billpayers around £30 by 2030.

 •   Electricity standing charges: Reform electricity standing charges, with further details to be announced next year.

 •   Gas Shipper Obligation: Scrap the planned new tax on gas bills, ensuring that the costs of hydrogen projects are funded by the Government rather than by consumers.

This summary of the Autumn Budget Statement 2026 was produced on Wednesday, 28 October 2026 and is for your general information and use only. It is not intended to address your specific needs. You should not rely solely on this content, nor should it be considered or used as advice. Although efforts have been made to provide accurate and timely information, there can be no guarantee that it remains accurate as of the date received or will remain accurate in the future. Individuals or companies should seek appropriate professional advice after carefully examining their particular circumstances before acting on this information. We accept no responsibility for any loss resulting from acts or omissions related to this content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Tax levels, bases and reliefs are subject to change and their value depends on an individual's personal circumstances.