Labour says it will drive down energy bills by shifting green policy costs off household tariffs and into general taxation from 2026.
The Autumn Budget promise of an average £150 reduction from April next year is the headline. The real action lands a year later when the Energy Company Obligation ends and three quarters of the Renewables Obligation moves to Treasury funding.
Right now both schemes are baked into bills which is why they show up in Ofgem’s quarterly cap.
Ministers say stripping these levies out will deliver a long-term cut that lasts three years and hits every home.
ECO funding stops on 31 March 2026.
RO support will still run but 75% of its cost will no longer appear on your bill because the state will foot the tab instead.
Officials say this shift removes £88 from an average household through the RO move, £59 through ECO ending and a further £7 in linked VAT savings. That is how the £154 forecast becomes the Budget’s “£150” pledge.
Ofgem will confirm the April to June 2026 cap in February. Wholesale prices still drive around forty per cent of what you pay so the final bill hit depends on global gas markets not just UK policy tweaks.
Other bill components remain untouched. Network charges for upgrading pylons and pipes stay exactly where they are because the system still needs investment to keep power secure and reliable.
Households on fixed tariffs will not miss out. Labour expects suppliers to pass through the lower policy costs from April 2026 and keep doing so until 2029.
The Budget analysis shows a £134 cut for a “typical” dual-fuel home using Ofgem’s standard consumption levels. That is lower than the headline figure because typical households use less electricity than the national average so the RO and ECO reductions land differently.
High-use rural homes with poor insulation could see £205 off. Medically vulnerable households that run constant heating and equipment could save £224.
Low-demand flats are forecast to get £88. All-electric storage-heated homes could be the biggest winners with an estimated £442 shaved off their annual bill.
Labour is betting voters will back the switch from bill funding to taxation. Treasury officials insist it is fairer because support for green schemes no longer depends on how much energy a household uses.
Labour’s energy bill cutting budget explained appeared first on Energy Live News.