Budget 2025 - Measures to cut household energy bills

26th November 2025

The government says its measures will reduce average household energy bills by about £150 in 2026-27.

Some households — particularly lower-income or vulnerable ones — can see savings up to £300 per year, depending on use and eligibility for support.

Part of the savings come from scrapping certain levies and environmental/social obligations previously applied to energy bills, which are now being funded differently.

The government is expanding support for vulnerable households via the Warm Home Discount and additional fuel-poverty support under its wider plan (sometimes called the "Warm Homes Plan").

The Budget does not cut or remove the 5% VAT already charged on domestic gas and electricity bills.

While the government says it is "working to reduce electricity costs," it hasn't committed to a specific new unit-price or billing cap beyond the general reductions via levy removal.

The reduction in bills depends on the Government’s ability to absorb costs formerly carried by levies — what actual savings you see will depend on your energy consumption, tariff, and supplier.