UK to cut household energy bills by 150 pounds a year

Britain will remove 150 pounds ($198.23) a year on average from energy bills by moving some costs to general taxation and cutting a scheme to help pay for home improvements, finance minister Rachel Reeves said on Wednesday.

The Energy Company Obligation, which forces energy companies to pay for measures like insulation and new heating systems for low-income households, will be scrapped in April 2026, Reeves said.

The ECO scheme came under scrutiny last month after the National Audit Office warned of potential fraud and poor quality work being undertaken under the programme.


Green groups however criticised the move to scrap it completely rather than reforming it.

"Cutting the insulation programme and funding risks leaving millions of households in fuel poverty, trapped in cold, damp homes," Greenpeace UK's head of politics, Ami McCarthy, said.

To further reduce energy bills, 75% of the cost of the Renewables Obligation, which helps pay for renewable electricity production, will also be moved to general taxation, budget documents showed.

Without the interventions, the price cap, set by regulator Ofgem, is set to reach 1,758 pounds a year in January, around 12% higher than the 1,568 pounds a year level it was at when Labour came into power in July 2024.