Autumn budget 2026: our response

Thursday 29 October 2026 (London): Following yesterday’s autumn budget announcement, Dr Garry Felgate, CEO of the MCS Foundation, said “The Government is right to focus on cutting costs for households this winter, and supporting more households to make the transition to homegrown energy is the way to do this.  

“Extending 0% VAT on electricity bills until July next year and replacing gas standing charges with costs placed on unit rates are welcome steps forward, alongside the Warm Homes Loan Scheme announced earlier this week. 

“The Chancellor’s announcement of a review of electricity levies through the Cost Control Framework presents a real opportunity to reduce the cost of electricity relative to gas and make clean heating more affordable. However, we had hoped that the budget would go one step further and mark the start of that reform by moving levies off electricity bills and into general taxation. Moving levies into general taxation would save the average household over £110 a year, according to MCS Foundation research, and have the greatest impact for those on low incomes. It would also incentivise the transition to clean heating by making heat pumps cheaper to run.  

“What will be disappointing to industry is the Chancellor’s confirmation that the VAT exemption on solar panels, heat pumps, and battery storage systems will end in March. This will increase costs for households looking to move away from the fossil fuels that are driving energy price spikes and is a blow to the renewables industry, which has seen record growth since 0% VAT was introduced in 2022.  

“While recent speculation on cuts to the Boiler Upgrade Scheme (BUS) proved overblown, the confirmation that planned funding is set to be reduced in the coming years will create further uncertainty for industry, which the Government must address to end our reliance on volatile fossil fuel markets and deliver on its growth strategy.”