December 2, 2025
Autumn Budget Briefing Produced by Hope for the Future's Political Lead - Alfie Prothero
Rachel Reeves’ Second Budget
On Wednesday, Rachel Reeves delivered her second budget to the House of Commons, following months of rife speculation and leaks.
The big headline grabber has been rising taxes: frozen income tax and national insurance thresholds, a “mansion tax”, and rises in taxes on dividends, gambling and milkshakes, to name a few - though a wealth tax, pushed by opposition on the left, was not announced. These higher taxes are, in the view of the chancellor, needed to fund politically important projects, and public services, while keeping commitments on borrowing and debt.
Major policy announcements include the end of the 2 child benefit cap, expected to lift 450,000 children out of poverty and welcomed celebratorily by Labour MPs, a rise in the minimum wage to £12.71, an increase to state pensions, and more money for schools, policing and the NHS.
Where was climate and nature?
Before the budget, there was concern that a public battle would be picked with climate and nature progress, increasingly presented as a blocker of growth by both government and opposition. Thankfully, this framing did not materialise. This was not an overtly “green” budget, but amongst the shouting of MPs, and the theatre, there were announcements which will have an impact on climate and nature in coming years.
On transport, EVs and hybrids will pay a road charge from 2028, argued as necessary to ensure the government can keep paying for road maintenance as the EV transition accelerates. This increase in cost comes alongside measures including £1.5 billion for programmes to manufacture EVs in the UK and £100 million for EV charging infrastructure, but the end of tax free ownership of EVs is seen to somewhat mix the messages on this transition.
For the first time since 1996, rail fares will be frozen next year. With inflation elsewhere, this will make travel by rail, often the most environmental option, relatively more affordable.
The Chancellor also announced that while the 5p fuel duty reduction introduced in 2022 will be extended until September 2026, the government intends to then remove this reduction over 6 months. This will bring in greater revenue from petrol and diesel at the pump, and possibly incentivise a faster transition towards electrified travel.
On energy, announcements from this year’s budget will reduce average household energy bills by £150 a year. This has been achieved through two major changes to government policy - reducing older renewable subsidies from electricity bills and placing these in normal taxation instead, and scrapping the Energy Company Obligation (ECO) scheme.
The former of these is seen as a positive step by the government, better reflecting the reality of cheaper, greener electricity to the consumer, and placing the greatest levy on polluting gas. The latter however, has been widely criticised by campaigners and industry bodies - by cutting ECO, which provides funding for improving homes energy efficiency, the government's budget for green homes shrinks by a quarter and an estimated 1 million families will not be able to insulate their homes in the next 4 years, directly impacting efforts to tackle long term fuel poverty, and demand on the grid from energy inefficient homes.
On the same day as the budget, the government announced its North Sea Future Plan, which reaffirms its commitment not to issue new licences to explore new fields, with a caveat in the form of Transitional Energy Certificates, which will allow limited oil and gas production in areas that that are already part of or adjacent to an existing licensed field. Though this will allow some new extraction, it is significantly limited in scope, and despite some poor reporting, serves as a real success in future UK emissions.
The chancellor also made reference in the budget to £14 million for low carbon technologies in Grangemouth, and building the UKs first small modular reactors in Anglesey.
Finally, the budget included announcements on devolution, particularly in England, with £13bn of “flexible funding” for seven regional mayors to invest in skills, business support and infrastructure and a new ability to levy a tax on visitor overnight stays. With so much climate and nature delivery ultimately occurring at the local level - from development, transport, waste and energy - providing local government with further funding and autonomy has the opportunity to push forward local climate and nature action
Concluding thoughts
This budget is certainly consequential. It brings significant changes to raised government revenue, and progress on hardfought campaigns such as child benefits. Climate and nature was not front and centre, the cutting of ECO is deeply concerning, and the EV framing may create mixed messages on the vehicle transition. However, there are real wins within the pages; funding for EV infrastructure, rail price freezes, cheaper electricity bills, devolved funding, and a commitment to no new oil and gas fields (though a decision on Rosebank still looms)
This budget shows the success campaigning can have on the government's stance, and more than ever before, the need to connect climate and nature directly to the priorities of people and politics, ensuring those who make decisions understand action is not a luxury, but essential to safeguard good jobs, warm homes, affordable lives, thriving communities, and a safe planet.
What can you do?
Feeling happy, sad, or angry about what was - or wasn’t - in the budget? Join our free, online training sessions to find out how you can reach out to, and meet with, your MP to share your thoughts:
Find out more and sign up for the sessions on our website: https://hftf.org.uk/events
