Andy Burnham's Energy Plan
Andy Burnham's Energy Plan
Andy Burnham's Energy Plan: What It Could Mean For Your Bills
Burnham has confirmed the first cut to your electricity bill. A second, bigger set of changes is still on the table. Here is what has actually landed, what has not, and what it means for switching to a heat pump and pairing it with solar.
On his second day as Prime Minister, Andy Burnham confirmed that VAT on domestic electricity bills will be cut from 5% to 0%, effective 1 October 2026 and running to 31 March 2027. It applies to electricity only, not gas, and takes around £45 a year off a typical bill. The cut is funded by cancelling the previous government's Digital ID programme, a decision already facing questions over whether the funding fully covers the cost.
Martin Lewis, founder of MoneySavingExpert, welcomed the move but warned people may not feel much benefit, since the October price cap is separately expected to rise around 3.1%, worth over £50 a year on typical bills. In his words, it is "a good totemic step," but the timing means the saving risks being cancelled out before most households notice it.
Separately, the Department for Energy Security and Net Zero closed its consultation on legalising plug-in solar kits on 30 June, and is due to publish its response this Wednesday. And the bigger reform still on the table, cutting the gas standing charge and rebalancing electricity costs to make heat pumps cheaper to run than gas boilers, based on a proposal from the thinktank Nesta, has not been confirmed.
One of these changes is now real. The rest are still proposals. Here is what is actually confirmed, what is still on the table, and how to work out your own number in about a minute.
5 Changes To Watch This Week
One is confirmed government policy. One has a dated response due this week. Three remain proposed and would need the autumn budget. Here is the difference at a glance.
The confirmed VAT cut is a standalone government policy, not the same mechanism Nesta proposed. It saves £45 a year on its own, temporarily, funded by cancelling the Digital ID programme. The £42, £103 and £130 figures elsewhere on this page come from Nesta's own modelling of a different, permanent package, most of which remains unconfirmed.
What Nesta's Own Numbers Actually Show
Nesta modelled the bill impact of solar, battery storage and heat pumps back in January 2026, using April 2026 forecast prices. The pattern holds regardless of which reforms land when. Every low carbon combination beats a standard dual fuel home on a standard tariff.
| Household setup | Annual bill | Saving vs dual fuel |
|---|---|---|
| Dual fuel, standard tariff | £1,668 | – |
| Heat pump only | £1,387 | £281 |
| Solar only | £1,047 | £621 |
| Solar and battery | £919 | £749 |
| Heat pump and solar | £721 | £947 |
| Heat pump, solar and battery | £667 | £1,001 |
Source: Nesta, 20 January 2026. Modelled for a medium 2 to 3 bedroom home, April 2026 forecast prices.
The heat pump only row is the one worth sitting with. Adding a heat pump on its own saves £281 against a gas boiler, but it is the smallest saving on the table. Add solar to the same heat pump and the saving triples to £947. That is not a coincidence. A heat pump is the single biggest new electricity load most homes will ever add, and solar is what lets you generate a meaningful share of that load for free instead of buying all of it from the grid.
What Nesta Is Now Asking Burnham's Team To Do
On 18 July 2026, the day Burnham became Labour leader, Nesta published new analysis aimed directly at his incoming team. Four measures, they say, would cut the typical bill by £130 a year and push the electricity to gas price ratio down from 3.56 to a historic low of 2.73, low enough to make heat pumps the cheaper option on the market.
| Measure | Price ratio | Annual saving |
|---|---|---|
| Status quo | 3.56 | – |
| Abolish gas standing charge | 3.18 | £22 |
| + Remove remaining RO and FiT levies | 2.98 | £64 |
| + Reduce VAT on electricity to zero | 2.84 | £103 |
| + Forgive electricity debt (all four) | 2.73 | £130 |
Source: Nesta, 18 July 2026. Modelled using the Ofgem price cap for July to September 2026. Proposal under consideration, not confirmed policy.
In the event, it was not the gas standing charge that moved first. On his second day as Prime Minister, Burnham confirmed a standalone cut to VAT on electricity instead, effective 1 October 2026, saving £45 a year on its own, not the £103 Nesta modelled as part of this permanent four-measure package. The gas standing charge, the electricity levies, and the debt forgiveness measure all remain proposals, not confirmed policy. See the changes grid above for where each one actually stands.
Why Cheaper Electricity Does Not Undercut Solar
If electricity gets cheaper, does self-generated solar power become less valuable? A little, per unit. But the reforms Nesta is proposing are specifically designed to push more households onto heat pumps, and a heat pump is a bigger electricity load than almost anything else in a typical home. More demand in the house means more of your own solar generation gets used directly instead of exported for a lower rate. The table above already shows this in practice. That is why the heat pump and solar combination saves £947 a year, not the £281 plus £621 you would get by simply adding the two savings together.
Get Ready For The Demand, Today
Full plug-in solar that connects straight to your wall socket is not legal in the UK yet. The BSI standard it depends on has not been confirmed. But you do not need to wait to start generating your own power. Portable solar and battery kits let you charge devices, run a home office, or build up backup power today, off-grid, entirely legally, so you are already in the habit and already equipped by the time the wiring rules catch up.
What You Can Do Now
If you want the best setup for future savings, there are two moves worth making, and they are stronger together than either one alone.
Claim The Grant Now
The Boiler Upgrade Scheme is confirmed and live today. £7,500 towards a heat pump for most households, £9,000 if you are switching from oil or LPG. That part of the maths does not depend on anything still to be announced.
The catch: your heating bill goes down, but your electricity bill goes up. A heat pump runs entirely on electricity, and for most homes that is the single biggest new electricity load they will ever add.
Get Ready For Plug-In Solar
Plug-in solar is not legal to connect to your household wiring yet. The DESNZ response due this Wednesday is the next real step towards changing that. An off-grid kit today works entirely legally for portable charging and backup power, and swaps straight over to household use the day the rules catch up.
Why now: you are already in the habit and already equipped the moment plug-in solar goes legal, instead of starting from scratch once everyone else is trying to buy the same kits.
These two moves solve each other's problem.
The grant gets your heat pump in cheaply, but it adds new electricity demand. Solar is what covers that demand for free. Claim the grant now, knowing the electricity increase is coming, and have solar ready to absorb it the moment it is legal, so the gap between the two is as short as possible.
Work Out Your NumberHeat Pump & Solar Savings Calculator
Six quick questions. Get an estimated annual result and a full breakdown.
Dedicated heat pump tariffs can be lower than the default tariff, but availability and rates vary by supplier and region.
Modelled on Nesta's own figures: roughly £83 a year off a typical electricity bill from removing levies and zero-rating VAT. Proposal under consideration, not confirmed policy.
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Popular right now while the summer heat and this energy story both run at once.
Estimates only, not a property-specific quote. BUS grant values reflect the published uplift for eligible oil and LPG homes from 21 July 2026. Ofgem's July 2026 default tariff update puts average direct debit electricity at 26.11p/kWh. Heat pump COP assumed at 3.2. Speak to an MCS-certified installer for an exact figure.
Will I save money by switching to a heat pump?
Is plug-in solar legal in the UK yet?
Do heat pumps come with a battery?
What is the Boiler Upgrade Scheme grant worth?
Does solar still make sense if electricity gets cheaper?
What is a heat pump tariff, and does it help?
The Bottom Line
One of these changes has already landed. On his second day as Prime Minister, Andy Burnham confirmed a cut to VAT on the electricity you buy, worth £45 a year from 1 October 2026. That is separate from the gas standing charge, which remains proposed, and the bigger electricity reforms, which are more likely to wait for the autumn budget. The plug-in solar response due Wednesday could still land broadly as consulted on, or get delayed again. What is certain is the direction of travel. Every credible proposal and confirmed step so far makes electrification, heat pumps, and solar more attractive, not less.
One thing does not depend on any of these announcements, and it is a different VAT measure entirely from the electricity bill cut above. The 0% VAT relief on qualifying solar and battery storage equipment and installation is due to end in March 2027. Whatever else happens with electricity bills between now and then, that deadline does not move. If you have been waiting for the right moment to start generating your own power, the case for acting before that date, not after it, only gets stronger the more of this proposal actually lands.
See What You Could Save Before The Deadline
0% VAT on qualifying solar and battery storage equipment ends March 2027.
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