Opinion piece by Sam Baptist, Director of Policy & External Affairs at CIBSE
The Chancellor’s Budget, delivered on 28 October, has placed energy affordability, housing and infrastructure delivery at the centre of the UK Government’s economic agenda, with a series of measures that will have implications for the building engineers, particularly the domestic sector.
While the continued commitment to clean heat and investment in affordable housing is welcome, the Budget also raises important questions about the future of building regulations and the pace of improvements and investment for the built environment.CIBSE’s Director of Policy & External Affairs, Sam Baptist, explores the announcements made in the Budget and what they mean for CIBSE members and the wider sector.
Energy affordability takes centre stage
The Budget places a clear emphasis on reducing energy costs for households and businesses, both through immediate support and longer-term reform.
Households in England in council tax bands A to D will receive a one-off £100 Household Energy Payment from January 2027, with similar payments expected across the rest of the UK. Alongside this, the temporary VAT cut on domestic electricity is extended until July 2027.
The UK Government has also committed to abolishing domestic gas standing charges, reforming electricity standing charges and establishing a new framework for controlling energy costs. No further policy costs will be added to energy bills until this framework is in place, with the aim of ensuring that future energy policy delivers better value for consumers.
The Budget also introduces targeted support for businesses through the British Industrial Competitiveness Scheme (BICS), which will reduce electricity costs for more than 10,000 eligible businesses from April 2027. The scheme is particularly relevant to energy-intensive manufacturers and businesses involved in the supply chain for construction products, building systems and infrastructure. It is expected to reduce electricity bills by up to 25%.
Boiler Upgrade Scheme funding reduced, with a new financing offer
The Budget confirms that the Boiler Upgrade Scheme (BUS) will continue, with funding maintained at £400 million in 2027–28, rising broadly in line with inflation thereafter. This is a less ambitious settlement than the previous Warm Homes Plan funding trajectory, which envisaged annual BUS budgets rising to £709 million by 2029–30.
The UK Government has also announced a £1 billion reduction in capital grant funding for the wider Warm Homes Plan, although the majority of funding for low-income households and social housing is protected, delivered through mayoral authorities and local councils.
Alongside the BUS, the new Warm Homes Loan Scheme will provide government-backed, zero- and low-interest loans to help households meet the upfront costs of installing technologies including heat pumps, solar panels and batteries. The loans can be combined with BUS grants, potentially making clean heating more accessible to households that might otherwise struggle with the initial investment.
Building regulations: certainty for developers, questions for the sector
One of the most significant announcements for the built environment is the Chancellor’s commitment to make no major changes to building regulations for the remainder of this Parliament (2029), except where necessary for building safety.
The UK Government’s stated intention is to provide greater certainty for developers and support the delivery of new homes, alongside measures to accelerate brownfield development and increase investment in social and affordable housing.
While regulatory stability is important for the construction sector, the commitment on building regulations raises questions about how the UK Government will continue to make the regulatory changes needed to improve building performance, energy efficiency, resilience and the quality of our homes.
The Budget also provides an additional £1.5 billion for the Social and Affordable Homes Programme, taking the UK Government’s total commitment to social and affordable housing to more than £40 billion over the next decade.
Data Centre Covenant: accelerating infrastructure while raising expectations
The Budget launches a new British Data Centre Covenant, setting out the UK Government’s approach to accelerating the development of strategically important data centres while ensuring that their growth delivers wider benefits for the UK.
The covenant establishes a series of expectations for data centre operators, covering energy costs, environmental performance, local communities, skills and national security. All data centres are encouraged to meet these standards, while projects seeking enhanced UK Government support will be required to do so.
The covenant also expects data centres to support grid resilience, flexibility and clean power, and to meet the full energy-system costs they create. In return, strategically important projects will benefit from UK Government intervention to accelerate grid connections, with controlled provision for on-site generation where necessary.
What this means for CIBSE members
Overall, I see this as a mixed Budget for the built environment and the sectors our members operate in. The UK Government has clearly prioritised reducing energy costs for households and businesses, which is welcome, although the immediate financial support is modest and for many, the support doesn’t come quickly enough. The longer-term ambition to make energy cheaper and more secure will be important, particularly as we continue to electrify heating and improve the performance of our buildings.The continued commitment to the Boiler Upgrade Scheme is reassuring, particularly against speculation ahead of the Budget that it could be scrapped or heavily reduced. However, the funding settlement for 2027–28 and beyond represents a significant reduction against the previous trajectory for the scheme, which seriously jeopardises the Government’s own heat pump installation targets. I am quietly optimistic, though, that uptake will continue to increase, particularly with the introduction of the Warm Homes Loan Scheme, which will help households overcome the upfront costs of switching to clean heating – one of the principal barriers to adoption.
The British Industrial Competitiveness Scheme and the Data Centre Covenant also have important implications for our members. Targeted support for energy-intensive businesses should help improve industrial competitiveness, while the expansion of data centre infrastructure will create significant opportunities for building services engineers in areas such as energy efficiency, cooling, electrical infrastructure and heat recovery.
The commitment to regulatory stability in relation to building regulations is understandable at a time when developers are under pressure to deliver more homes. But this cannot come at the expense of reforms that improve housing quality, safety and energy performance. We expect planned changes, including the Future Homes Standard and the review of Part O, to continue, and clarity on the implications of this announcement to existing reforms will be needed quickly.
For CIBSE members, ensuring the homes, buildings and infrastructure we deliver are safe, healthy, energy-efficient and resilient will endure. The Budget reinforces the importance of building engineering in achieving these outcomes and CIBSE will continue to support its members through technical guidance, knowledge production, training and professional registration. We will continue to engage with the UK Government to ensure that policy implementation eases the delivery of better buildings in practice and recognises the expertise of our profession.