“This Budget marks a clear shift in energy policy, with affordability now the first test. The new Cost Control Framework, due to be introduced in 2027, will set budgets for different elements of energy costs, including policy costs, over 10 years. This signals that while clean power remains the government’s route to energy security, cost will be a much more explicit factor in investment decisions. Ministers will hope this ensures the transition is delivered at the lowest possible cost to billpayers giving more confidence to households and businesses alike.
“There is a message here for investors as well. Stronger controls on what bill payers fund, and a closer look at the value for money of existing commitments, suggest government will be tougher on the terms it offers in future. That will be welcome news for many, but it could worry investors at a time when the country still needs significant new generation, so they will be looking for more information on what the framework means in practice.
“For households, the shift will take time to show up in bills. The £100 payment will take some of the sting out of this winter for the 20 million households it helps, though bills will still go up for almost everyone. Scrapping the gas standing charge, from 2027 at the earliest, could help lower-income households who use little gas, while some higher users, including vulnerable people in poorly insulated homes, could pay more. The mitigations the government has promised will be essential to ensure households see the benefits.
“Businesses will see Climate Change Levy rates frozen for 2028 and future hydrogen support funded by taxpayers rather than added to energy bills. This is in addition to previous announcements on introduction of the British Industrial Competitiveness Scheme and removal of Carbon Price Support from 2028
“Putting cost first is understandable when bills are this high, and the test now is whether the framework due in 2027 can bring bills down while still giving investors the confidence to build what the country needs.”
