UK energy cuts of more than £3bn help fund defence; experts doubt green heating targets

The UK government has unveiled more than £3bn in cuts to the budget of its energy department, much of which will pay for higher defence spending, The Guardian reported.

The cuts were set out by Chancellor John Healey, who delivered the Budget 2026 speech. The chancellor is the minister in charge of the government's spending and taxes. Healey said the government would fund its defence investment plan in part through cuts to other departments. He was appointed chancellor on 20 July 2026, after serving as Secretary of State for Defence from 5 July 2024. The energy department is now led by Miatta Fahnbulleh, who succeeded Ed Miliband as energy secretary.

The largest single share, £741m, came from the boiler upgrade scheme. That is the government's programme to encourage households to replace gas boilers with electric heat pumps. Under the scheme, a typical household can claim £7,500 towards a heat pump, and about 60,000 heat pumps a year are fitted in existing homes. The government has a target of 250,000 installations a year by 2030.

Funding for the scheme had been planned to rise from £400m in 2026 to just over £700m by 2029-30. Ministers said that funding would now rise only in line with inflation. Experts warned that Britain is unlikely to hit its green heating targets after the cuts.

Other reductions included about £250m from the warm homes plan, £500m from hydrogen schemes and £200m from carbon capture and storage funding.

Healey also announced that renewable energy projects would in future be approved only if they could be shown to bring costs down and were ready to be connected to the electricity grid, the network that carries power to homes and businesses.

The Budget 2026 document describes the Budget as the start of a new energy pathway, on which the government's 10 Year Plan will build. It states that the government will prioritise cheaper energy. Energy Live News reported that the chancellor extended the VAT freeze for energy prices in the Autumn Budget 2026.