Household energy bills are expected to fall by about £150 a year under measures set out in the Autumn Budget this week, with the government planning to remove some policy costs from bills and fund them directly.
The changes include ending the Energy Company Obligation (ECO) scheme, which currently supports insulation and energy efficiency improvements and is paid for through customer bills. The government also intends to fund 75% of the domestic cost of the legacy Renewables Obligation for three years from April 2026.
ECO has been in place in various forms for more than a decade and has been one of the main routes through which households received support for energy-efficiency improvements. The programme will end in March 2026, but there is no confirmation of what, if anything, will replace it.
Taken together, the Treasury estimates these measures will cut the average annual energy bill by around £150. Homes with heat pumps or electric storage heating are projected to benefit the most.
In addition to bill reductions, the Warm Home Discount will expand to cover six million households this winter, offering a one-off £150 discount on energy bills to each eligible home.
Alongside the changes to levies, £1.5bn in new capital funding has been committed to the Warm Homes Plan, which addresses fuel poverty.
The Chancellor has also announced that SMEs will no longer pay co-investment for apprentices under 25, extending prior relief (previously under-22s) to make training fully funded via an extra £725 million over this Parliament.
Additional reforms scrap the 10% levy top-up for large employers and halve their levy spending window from 24 to 12 months, streamlining the system ahead of the Growth and Skills Levy transition from April 2026.
Industry reaction to the budget has been mixed, reflecting both support for lower bills and concern over the loss of ECO funding. Below, we round up perspectives from across the energy sector.
Martyn Bridges, director of external affairs at Worcester Bosch, says that the ECO scheme being scrapped will impact manufacturers’ ability to avoid fines under the Clean Heat Market Mechanism (CHMM). He says:
“ECO 4 has fully funded just under 39,000 heat pumps up, an average of around 1,000 appliances a month. In [this] budget, the chancellor announced that ECO will not continue after the 1st April 2026, saving households around £150 annually on their energy bills.
“As these appliances were all eligible to be counted towards the target quota that manufacturers have to meet to avoid fines under the CHMM, then the CHMM targets need re-appraising. Removing on average 12,000 funded heat pumps from the market would potentially result in fines in excess of £6m for manufacturers as they cannot meet their quotas.”
Ian Rippin, CEO at MCS:
“MCS is disappointed by the decision to end the Energy Company Obligation (ECO4), which will create substantial challenges for businesses, hinder sector growth, and adversely affect some of the most vulnerable households in the country…While parts of the industry are left with significant uncertainty after today’s Budget, MCS is pleased that the Boiler Upgrade Scheme (BUS) has not been impacted.”
Sachin Vibhute, technical consultant and product training manager at LG:
“The budget was light on tangible solutions that will help heat pump installations to scale. Continued investment in schemes such as the Boiler Upgrade Scheme is one thing. But we need clearer consumer guidance, and long-term policy. Without regulatory mandates to install green technologies, we risk the loss of long-term momentum.”
“Manufactures are already playing their part in driving long term momentum, helping to train a skilled workforce prepared to meet the evolving demands of HVAC installation and maintenance. To help carry this forward, I’m glad to see the government fully fund apprenticeships for under 25s in small and medium businesses. Here, installers could benefit from the change.”
Chris Claydon, chief executive of JTL, welcomes the Autumn Budget’s emphasis on skilled trades for growth and net zero goals:
“Fully funded apprenticeships for under-25s and extended support for SMEs are positive steps that give employers confidence to invest in the next generation. It’s also encouraging to see investment in construction and infrastructure, but this must be matched by a skills system that enables businesses to build the workforce needed.”
Custom Heat, which operates across Coventry, Rugby and the wider Midlands area, said the changes to apprenticeships represents a significant opportunity to build the workforce needed to deliver the government’s net zero ambitions. MD Lincoln Smith says:
“This is genuinely welcome news for businesses like ours. We’re committed to training the next generation of heating engineers, but the costs can be substantial for an SME. Making apprentice training free for under 25s removes a real barrier and will help us, and companies like us, recruit more young people into what are essential, future proof careers.”
Image credit: Chancellor of the Exchequer Rachel Reeves prepares to deliver her Budget from 11 Downing Street. Picture by Ben Dance / FCDO
