The UK’s Chancellor of the Exchequer, Rachel Reeves, delivered the Labour Government’s second Autumn Budget yesterday. After months of speculation, leaks and the Office of Budget Responsibility’s (OBR) accidental early release, we finally have the full details of the Budget.

For the energy sector, the Autumn Budget presents a mixed picture. Cuts to the ECO (Energy Company Obligation) scheme, tax increases affecting electric vehicles and company dividends, and greater investment in apprenticeships will all make a notable impact on the sector.

The economic context to the Autumn Budget

First, the priorities of the 2025 Autumn Budget, according to the Chancellor of the Exchequer, were to “cut NHS waiting lists, the national debt and the cost of living”. Tax rises were used to create the reported £22 billion of fiscal headroom and reduce Government borrowing.

Overall, the measures set out in the Autumn Budget offer a mixed picture for the energy sector. Some changes may lead to job losses or redeployment, while increased funding for apprenticeships could help small and medium-sized energy businesses increase their talent pipeline for future generations. However, questions remain on the full impact this will have on the sector’s ability to meet the UK’s 2030 Clean Power targets and ultimately, Net Zero.

What are the key measures in the Autumn Budget for the energy sector?

Energy bills

Energy bill reduction is one of the major headlines of this year’s Autumn Budget. Whilst this is great news for consumers, it will have consequences on the sector. The fall in energy bill prices comes from cuts to the green levy and the scrapping of the ECO scheme.

The reaction to this measure has been mixed. While Energy UK, the trade association for the energy sector, says that they “warmly welcome” the announcement, they are also concerned that scrapping the ECO scheme will undermine home insulation efforts which would have also lowered bills. Additionally, they warn of the effect on the businesses and supply chains involved with the ECO scheme. E3G, an independent think-tank, has reported that as many as 10,000 jobs may be lost due to this measure.

Although other warm home schemes remain in place, closing the ECO scheme will have an immediate impact on the retrofit industry. Some commentators argue that the policy is short-sighted, as the potential job losses may cost the economy more in the long term.

Electric vehicles

The new mileage-based charge for electric and hybrid cars is set to come into force from 2028, with charges at 3p per mile for electric and 1.5p for hybrid cars. This change is expected to have a significant impact on the future of EV adoption. As the UK approaches the 2030 deadline for all new car sales to be only electric and hybrid vehicles, uptake remains comparatively low, with just 22% of new cars being fully electric. There is concern that the new mileage-based tax could slow adoption further.

While the mileage-based charge is not a major expense, the main issue here is perception. Electric cars already have the stereotype of being too expensive, and now, a mileage charge may prove a further disincentive for consumers to purchase electric vehicles in the future. According to the OBR, it could reduce the number of EV cars bought by 440,000, a very significant number.

There are, however, a number of positives in the Autumn Budget that may help cushion the blow to the industry. The Budget announced an investment of £200m for the rollout of much-needed EV charging points, and the extension of the Electric Vehicle Car Grant until 2029/30 with an additional allocation of £1.5 billion. These investments should provide a boost to the sector, although it remains unclear whether it will offset the impact of the new mileage-based charges.

Dividends

Another measure that will effect the energy sector’s ability to secure contract talent is the rise in tax on dividends. For PSC contractors who offer their services through their limited company, they will see a 2% tax increase on their profits.

For many PSC contractors, it is the flexibility and potential higher income that attracts them to become contractors. However, these increases can make it a less attractive route to take, as it would make them earn little more than a permanent employee, but without the protections. A reduction in contractors on the market could make it harder for energy companies to source much-needed talent for set projects on a short-term basis.

Apprenticeships

One of the more positive announcements in the Autumn Budget for the energy sector is the increased apprenticeship funding for small and medium-sized businesses. £820 million over 3 years will be invested in making apprenticeships free for companies that take on workers under 25. This measure aims to help reduce youth unemployment and create real opportunities for young people.

In a sector where skills gaps are wide and companies need to increase their talent pipeline, more funding for apprenticeships is always a very welcome development.

In conclusion, this is a mixed picture for the energy sector. Closing the ECO scheme is expected to contribute to job losses in the sector, the mileage tax on EVs may contribute to lower EV adoption, and the rise in dividend taxes may lead to challenges in attracting needed contractors for short-term projects. All of these measures may hinder the UK’s ability to commit to an energy transition. Whilst there are some positives, such as increased apprenticeship funding and investment in car grants and charging points, this Autumn Budget may not be considered a clear win for the sector.

If you are looking to hire great energy sector talent, VIQU Energy has the expertise and talent to secure the talent you need. Click here to get in touch with our team.