Why Leaked Briefings and Rumours are Sparking Real Concerns Across the UK's Net Zero Sector.

With Rachel Reeves's Autumn Budget landing on 26 November 2025, leaked briefings from the Treasury and rumours have sparked real alarm and concern across the green economy. Reports suggest the Chancellor is eyeing cuts to key demand-side incentives, the Boiler Upgrade Scheme (heat pumps), broader green levies that fund insulation, and possibly new running-cost hits for electric vehicles, all to shave pounds off household bills in the short term and help plug a £30-40 billion fiscal hole.

These aren't confirmed policies yet, but the signals are strong enough that industry bodies, installers, and manufacturers are already warning of irreversible damage to net zero progress and delivery capabilities. Here's what's reportedly on the table, why it matters, and what the hard numbers say about the risks.

1. Heat Pump Grants Under Threat...just as installations are finally picking up

The Boiler Upgrade Scheme (BUS) currently offers England and Wales homeowners £7,500 towards an air-source heat pump (or £5,000 for biomass). It's the main reason upfront costs have started to fall, and it's been extended to 2028 with a £295 million pot confirmed for 2025/26.

But Treasury sources have briefed that funding could be slashed or the pot raided to cut household energy bills quickly, potentially reclaiming £2-2.5 billion from slow-spending green programmes. Industry reaction has been furious: installers say a big cut would "take a sledgehammer to the heat sector" and wreck confidence at the exact moment demand is growing.

The numbers don't lie:

• Government target (set in 2020 and reaffirmed): 600,000 heat pump installations per year by 2028.

• Climate Change Committee pathway to net zero: closer to 900,000-1 million annually by 2030, with 8 million in existing homes by 2035.

• Actual 2024 installations: around 72,000–80,000 (up from 55,000 in 2022 but still only ~12% of the 2028 goal).

• Recent progress: BUS applications hit record highs in summer 2025 after the scheme was expanded to include air-to-air heat pumps.

Cutting the £7,500 grant, when 75% of homeowners say they won't pay more than £5,000 out of pocket, would stall the supply chain that's only just scaled up training and manufacturing. We've seen this before with the spectacular failings of the Green Homes Grant chaos in 2020-21, which collapsed installer confidence overnight, mostly thanks to its rushed implementation, complex design, poor administration, and a final failure to meet nearly all of its targets.

Whilst this isn't in the same league as the Green Homes failure, it does highlight the negative impact that uncertainty and dropping incentives can have on a market. If our ultimate goal for net zero is to move away from gas then finding ways to accelerate a route to market for the technologies that can enable that transition is absolutely vital.

2. A Potential Pay-Per-Mile EV Levy...toxic in timing?

Electric vehicles already lost their Vehicle Exise Duty (VED) exemption in April 2025 (£195 standard rate from year two, plus the £425 Expensive Car Supplement for most models over £40k). Now reports say Reeves is considering announcing a 3p-per-mile charge from 2028 (on top of VED), adding ~£250 a year for the average driver (assuming annual mileage of 8,000 miles).

The Treasury argues fairness: petrol drivers pay ~£600/year in fuel duty; EVs pay nothing per mile driven. Fuel duty revenue is collapsing (projected drop from 7% of tax take in 2019/20 to just 2% in 2025/26).

Industry view: The Society of Motor Manufacturers and Traders have suggested that introducing this scheme is "entirely the wrong measure at the wrong time." It would hit high-mileage drivers hardest just as private buyer demand is fragile, whilst others have highlighted the inconsistency of incentive schemes to purchase EV's whilst simultaneously decentivising market take-up through the 'pay-per-mile' scheme (see our blog entry on this: https://www.creatingsustainablecities.org.uk/post/lesson-one-how-to-quickly-undermine-an-entire-market-introduce-a-pay-per-mile-for-ev-vehicles).

Key 2025 EV stats (SMMT data to Oct 2025):

• Battery EV (BEV) market share YTD: 22.4% (386,000 registered) – up in volume but growth slowing vs 2024.

• Still below the 28% Zero Emission Vehicle (ZEV) Mandate for 2025 (rising to 80% by 2030).

• Private buyer share of BEVs has fallen to ~23% (fleets dominate thanks to tax perks).

• Overall new-car market down in several months; BEVs holding up but vulnerable.

Even with a 3p/mile charge, analysis from the Energy & Climate Intelligence Unit shows EVs would remain £1,000/year cheaper to run than petrol cars. But when it comes to people choosing to buy EVs...perception matters, another tax signal risks reinforcing "EVs are a political football" just as second-hand prices are finally dropping.

3. Green Levies and the Future of ECO, the quiet killer for insulation?

Budget rumours suggest that the government is considering removing the environmental levy on energy bills (these levies add approximately £43 to the average annual bill for the ECO portion) that funds the Energy Company Obligation (ECO) scheme, with the funding to be shifted to general taxation or a wider Warm Homes Plan. This is part of a broader plan to cut average household energy bills by around £170 a year, but would see the ECO scheme scrapped or heavily cut.

ECO4 facts (Ofgem data to mid-2025):

• Running April 2022-March 2026 (£4 billion total).

• ~875,900 measures installed in 260,000+ homes so far.

• Focus: EPC D-G homes, heavy emphasis on fuel-poor/private rented.

• Recent consultation by government (closed June 2025) was planned to address challenges in delivery and ensuring targets are met.

However, reports suggest the funding for ECO would be wrapped into the existing government's £13.2 billion Warm Homes Plan, which is set to be funded through general taxation. This would make the costs of these policies more progressive, as they would no longer be a flat charge on all energy bills regardless of income.

Yet, the potential changes have drawn criticism from energy companies, consumer groups, and environmental organisations, who warn that diverting funds could damage investor confidence, threaten the UK's climate goals, and risk fuel poverty targets. Essentially the government must ensure a smooth transition between schemes so any transfer doesn't hit vulnerable households or trigger a collapse in the retrofit supply chain, which could impact jobs and a regions ability to insulate and improve the energy efficiency of households.

The Bigger Picture: Short-term bill cuts vs long-term pain

Reeves faces brutal choices, a weaker-than-expected economy, higher debt interest, and welfare reversals have blown a multibillion black hole. Cutting green levies or grants looks like quick relief (£100-300 off bills) and certainly meets

But the maths on the other side is stark:

• Electrifying heat and transport is the only structural way to shield households from gas price spikes that have still not recovered from 2022 (a combination of increased global demand and the war in Ukraine disrupting supply and driving up wholesale costs)

• Cold homes cost the NHS ~£2.5 billion per year; poor insulation and fuel poverty are major contributors to thousands of excess winter deaths in the UK annually.

• Delayed transition = higher 2030-2050 costs to hit legally binding carbon budgets (Committee on Climate Change)

Taken together, these moves would send a clear message: the government’s priority is short-term fiscal optics, not long-term economic transformation.

The UK economy stands to benefit massively from:

• Cheaper energy for households

• A more resilient, electrified energy system

• Enhanced energy security

• Reduced exposure to volatile global gas markets

• Lower costs to the NHS from cold homes and air pollution

Yet ministers appear ready to trade these structural advantages for marginal, symbolic

Budget savings. This is the latest in a long list of stop–start decisions that destabilise markets, erode consumer trust, and undermine investment:

• The collapse of the Green Homes Grant

• The scrapping of zero-carbon homes

• Delays to petrol car phase-out targets

• Confusion over heat pump regulations

• Early closure of the Public Sector Decarbonisation Scheme

• Lack of long-term retrofit funding

No major economy has ever achieved a successful energy transition through on-off policymaking.

Six Months to Make or Break Net Zero Momentum

With opposition parties openly contemplating loosening or scrapping net zero targets altogether, the next six months are existential. Investors are already asking whether the UK remains a reliable place to deploy capital.

If the Budget goes ahead with these cuts, Britain risks:

• Losing its competitive edge

• Stalling clean jobs growth

• Failing to meet legally binding carbon budgets

• Leaving households exposed to high energy bills

Far from “getting a grip” on spending, the government would be locking the UK into higher long-term costs, greater climate risk and weaker energy security.

Conclusion: A Budget That Risks Undoing a Decade of Progress?

Heat pumps, EVs and insulation are not luxuries, they are the core pillars of a credible net zero economy. Cutting support now is like deciding halfway through building a bridge that it’s too expensive to finish, and cheaper to leave everyone stranded. It is not prudent. It is not strategic. It is not economically literate.

It is short-sighted, ill-thought through, and deeply damaging to the UK’s future.

If the government wants to restore confidence, from households, from industry, from international partners, it must reverse this spiral of indecision and support the policies that actually work, or at least find ways to make them work more efficiently.

Otherwise, Britain’s net zero transition may not just slow down.It may stall entirely.