Autumn Budget 2025: Implications for Business Energy Costs

On 26 November 2025, Chancellor Rachel Reeves delivered her second Budget against a tough fiscal backdrop: sluggish economic growth, inflation still above target, and rising government borrowing.

To rebuild fiscal headroom and support increased public investment, the Chancellor announced an unprecedented £26 billion in tax measures. Many of these policies had been pre-briefed in the media, creating a period of heightened speculation in the run-up to the Budget.

This article provides a brief summary of the key changes from an energy perspective;

Zero cut to VAT

Pre-Budget speculation had raised expectations of a VAT reduction on energy bills, particularly around the 20% rate applied to non-domestic consumption. However, the measure was ultimately ruled out, with officials citing its implementation complexity and the likelihood that it would have delivered limited practical benefit.

Enhancement of the Network Charging Compensation (NCC) Scheme

Budget 2025 highlighted the results of a recent consultation on the Network Charging Compensation (NCC) Scheme, which supports energy-intensive industries (EIIs). From April 2026, the British Industry Supercharger will be enhanced, with the NCC uplift increasing from 60% to 90%, reducing electricity costs for approximately 550 eligible businesses.

Review of New Energy Levies

The Chancellor committed to subjecting any future energy costs, including new levies, to enhanced scrutiny under a new framework, ensuring affordability, value for money, and minimal burden on businesses. Amid rising non-commodity costs, it is hoped that businesses will be afforded greater opportunity to scrutinise these charges and provide input.

Future of the Energy Profits Levy

The Energy Profits Levy (EPL), or windfall tax, will remain in place until 2030. It will then be replaced by the permanent Oil and Gas Profits Mechanism (OGPM), which could be introduced earlier if the EPL’s price floor, triggered by high oil and gas prices, is reached, providing greater clarity for long-term planning.

5p Fuel Duty Cut Retained

Businesses operating fleets will benefit from the continuation of the 5p fuel duty cut, remaining in place until the end of August 2026. Following this period, duty rates are scheduled to return gradually to March 2022 levels by March 2027. In addition, the previously planned inflation-linked increase for 2026–27 has been cancelled, providing further predictability for fleet operating costs.

British Industrial Competitiveness Scheme (BICS)

Announced earlier this week, the British Industrial Competitiveness Scheme (BICS) represents a significant initiative targeting energy-intensive sectors, primarily manufacturers within the UK Government’s IS-8 classification and their foundational suppliers. These industries have been identified as pivotal to the UK’s growth agenda under the Industrial Strategy.

Eligible businesses will receive long-term certainty regarding exemptions from policy costs, including the Renewables Obligation (RO), Feed-in Tariffs (FIT), and the Capacity Market (CM). The scheme is designed to support high-growth potential sectors, enhancing their competitiveness while facilitating the transition to net zero and contributing to broader economic objectives.

Energy-intensive businesses are strongly encouraged to engage with the BICS consultation, with the government actively seeking input from manufacturers and other relevant stakeholders. The consultation closes on 19 January 2026.

Final Thoughts

While Budget 2025 may not have provided immediate relief on rising energy costs, initiatives such as BICS and the enhanced NCC Scheme offer tangible opportunities for businesses to manage and reduce energy expenditure.

At Big Energy Group, our specialists are well placed to assess how your organisation can optimise energy consumption or reduce costs. Contact us today to explore tailored strategies for your business.

About Big Energy Group

Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 500 businesses across the UK. For more information, please visit bigenergygroup.co.uk.