Eligible households in England are due £100 energy payments from January 2027 under Chancellor John Healey’s Budget, while banks will pay a higher surcharge to help finance the support.
The Budget allocates £2.6 billion to the Household Energy Payment. Households in council tax bands A to D in England are scheduled to receive the payment, and devolved governments will receive funding for similar support. The Bank Corporation Tax Surcharge is set to rise from 3% to 6% for 15 months beginning Jan. 1, 2027.
The temporary electricity VAT cut, introduced Oct. 1, had been due to end March 31, 2027. The Budget extends the 0% rate on qualifying domestic electricity supplies until July 1, with an estimated £50 reduction in the annual Ofgem price cap in April 2027.
The government has asked the Office of Gas and Electricity Markets (Ofgem) to remove gas standing charges in Great Britain in 2027 or as soon as possible afterward. Those charges average £108 a year for a typical household. Suppliers would shift the costs into per-unit gas prices. The government estimates around 60% of account-holding households could save an average of £45 a year, and says it will set out targeted mitigation for a small number that may not see an automatic saving.
The Budget also introduces a Pension Tax Allowance for pensioners whose total income is up to the value of the full new State Pension. The Guardian columnist Aditya Chakrabortty argued that measures aimed at individual bills left Prime Minister Andy Burnham’s wider economic reform pledges unresolved. He linked the policy approach to money-saving campaigner Martin Lewis and reported that Healey had briefed Lewis at Downing Street before the Budget. Chakrabortty cited the allowance as one indication of Lewis’ influence.
The Office for Budget Responsibility forecasts growth of 1.2% in 2026 and 1% in 2027. The government says its 2027 spending review will set out a framework for controlling policy costs on energy bills.
