On 26 November, the Chancellor of the Exchequer delivered the Government’s second Budget since taking office. Against a challenging economic outlook, the Budget confirms that the overall tax burden will rise to a record 38% of GDP by 2030–31, with the focus of measures on welfare and cost of living support. For CIBSE and its members, the announcements present a mixed picture for the built environment, with some positive signals alongside areas of concern.
Key takeaways for CIBSE
Ending the Energy Company Obligation scheme: The Government will end the Energy Company Obligation (ECO) scheme in April 2026. ECO has, for more than a decade, required energy suppliers to fund energy-efficiency improvements for eligible households and small businesses. Although the NAO’s recent findings highlighted serious quality issues (reporting that up to 98% of insulation installations inspected were defective and required remedial work) the scheme has still been a major pillar of retrofit delivery in the UK. Ending ECO without confirming a replacement risks creating a gap in support for building energy-efficiency improvements. Ending ECO without confirming a replacement risks creating a gap in support for building energy-efficiency improvements. A new, better-designed scheme is urgently needed to maintain momentum on retrofit and provide industry certainty.
Additional funding for the Warm Homes Plan: The Warm Homes Plan will receive an extra £1.5 billion, taking its total allocation to more than £14 billion. This further investment is welcome, but the sector is still waiting for the publication of the Plan. CIBSE will be looking closely at how the forthcoming Plan directs funding towards high-quality and low-carbon retrofit, particularly for low-income households and small businesses, in light of the ECO scheme coming to an end.
Reduced electricity costs: The Government will offset 75% of the legacy Renewables Obligation (RO) cost from electricity bills. This should help lower electricity prices and strengthen the economic case for electrification of heat, particularly for heat pumps and electric-powered building systems. It is encouraging to see the Boiler Upgrade Scheme remain protected, and the Government’s intention to explore reduced electricity costs for manufacturers and other energy-intensive sectors. For CIBSE members, reducing the electricity–gas price disparity is critical to accelerating investment in low-carbon technologies.
Apprenticeships and Youth Guarantee: CIBSE welcomes the announcement that SMEs hiring apprentices up to age 25 will be fully funded, alongside a further £725 million for the Growth and Skills Levy. The Youth Guarantee also receives £820 million to support 18–21-year-olds into employment. These measures should help improve entry routes into engineering and technical disciplines, and CIBSE will engage with officials as further details emerge.
Other relevant announcements:
- Tax thresholds remain frozen until 2030–31.
- A council tax surcharge for properties valued at £2 million or above will be introduced from 2028. A consultation will take place early next year.
- A 3p/mile charge for electric vehicles will be introduced from 2028.
- Higher education providers will face a new £925 fee for international students, with the first 220 students exempt. A consultation has been launched.
- Funding for 350 new planners in England through the Pathways to Planning Graduate Scheme.
- A new Global Talent Taskforce and proposed reforms to high-skilled visa routes.
- Business rates reforms, including reduced rates for retail, hospitality and leisure premises, a higher-value multiplier for properties with a rateable value above £500,000 from April 2026, and new relief schemes to support the transition.
- Removal of customs duty relief for low-value imports (under £135) by 2029, with a consultation on the mechanism.
- Additional funding packages for devolved and local government, including:
- £13 billion for metro mayors
- £370 million for Northern Ireland
- £505 million for Wales
- £820 million for Scotland
CIBSE's response
Responding to the Budget, CIBSE Head of Government Affairs Sam Baptist said:
“Overall, this Budget offers a mixed picture for building services and the wider built environment. Shifting policy costs away from electricity bills is welcome and should help incentivise more homeowners and businesses to transition to clean power. Protecting the Boiler Upgrade Scheme and providing additional investment for the Warm Homes Plan is also positive - however, we are still waiting for the Plan to be published. With the ECO scheme coming to an end, the Warm Homes Plan needs to set out how it will deliver energy-efficient and low-carbon homes at scale.
There also remains a policy gap for the non-domestic sector, where businesses equally need certainty and incentives to decarbonise their buildings and install low-carbon technologies. With homes and buildings responsible for around 20-21% of UK emissions, CIBSE will continue to advocate for a coherent, long-term strategy that enables high-quality retrofit across all building types, underpinned by strong standards and a skilled workforce.”