UK Approves Electricity Bill Cuts of Up to 25% for Energy-Intensive Businesses

Key Facts

The UK government approved measures in its 2026 Budget to reduce energy costs for households and businesses, including a plan to cut electricity bills by up to 25% for energy-intensive businesses from April 2027. The plan forms part of measures combining direct relief with funding for low-carbon energy projects. The government also extended the cut in VAT on household electricity until July 2027. The Treasury said the extension is expected to lower Ofgem's annual energy price cap by about 50 pounds in April 2027. The measures put energy costs at the heart of the Budget, while open sources have not confirmed that John Healey announced a new government shift on the issue.

The Budget includes a direct payment of 100 pounds to eligible households in England, starting in January 2027, alongside support for devolved governments. Eligibility covers households in council tax bands A to D. The Treasury said up to 20 million households in England will receive the payment. For businesses, the plan targets bill cuts of up to 25% for more than 10,000 energy-intensive companies. The cuts take effect in April 2027, tying industrial support to a set date after measures to ease household bills.

On supply, the UK's energy security minister on 21 October 2026 approved the regulator granting consent for gas production from the licensed Jackdaw field. The government says the field will raise domestic gas output by about 6% at peak and could operate for up to 11 years. The department estimated the project would add 2.9 billion pounds to the UK economy, support hundreds of jobs and strengthen energy security. The government said the field would begin supplying gas to homes and businesses from the end of October 2026. The department linked the production decision to additional domestic supply, while reaffirming its commitment to ending the issuance of new licences and pursuing net zero emissions by 2050.

The government said the Jackdaw decision is consistent with legally binding climate commitments and announced in parallel the creation of the Energy Wealth Fund to finance renewable and low-carbon energy projects. The fund will launch with a deposit of 2 billion pounds from North Sea oil and gas revenues. This framework combines permission to produce gas from the field with funding for investment in low-carbon energy sources. Meanwhile, the Budget said a comprehensive framework to control energy cost components, including policy costs, would be presented as part of the 2027 spending review. Open sources have not confirmed that cost-of-living pressures were a direct reason for reassessing the green agenda.

The measures come as real GDP grew 0.7% in the third quarter of 2026 compared with the previous quarter, after growth of 0.5% in the second quarter. GDP was 1.9% above its level in the third quarter of the previous year. The Office for National Statistics attributed quarterly growth in the third quarter mainly to a 0.9% rise in services, particularly services provided to businesses. The production sector grew 0.1%, while construction contracted 0.7% over the same quarter. In a separate monthly estimate, GDP grew 0.7% in the three months to September, compared with 0.6% in the three months to August, after the previous August estimate was revised down from 0.7%.

The latest price data showed the Consumer Prices Index rose 3.5% in the 12 months to September 2026, compared with 3.1% in August. The Office for National Statistics is due to publish October consumer price inflation data on 18 November. In markets, Equinor shares closed at 42.76 dollars on 12 November 2026. The government's Rosebank field page shows that decision documents were listed on 5 November, without the page's open summary clarifying the decision's outcome. An Equinor official said the company expects the project to be approved, adding that "any other outcome would be highly exceptional," while the chief financial officer described the project as being in the "very final stages" and ready to start production within a few months. A UK court ruled in 2025 that the initial approval for Rosebank was invalid because of how emissions were reported, requiring approval to be granted again before production can begin.