What the 2025 Autumn Budget means for Energy, Water and Waste sectors
Today, the Chancellor announced the much awaited Budget, published alongside the Economic and Fiscal Outlook from the Office for Budget Responsibility.
As you will have seen, the Budget focussed on increasing taxes to fund the growing welfare system. Though away from the immediate headlines, there were several important announcements for the Energy, Water and Waste sectors. We cover those details below;
Water
- The timing of the White Paper for water reform in response to the Cunliffe review was confirmed today. We can expect it by the end of this year, building on the prior trailed commitments.
- The fines collected from water companies will now be compiled into an investment (£29m) for future projects on cleaning up waterways.
Recycling & Waste
- The government has confirmed the Landfill tax rates will not converge immediately, as previously consulted on earlier this year. The rate of the higher band of tax will increase by the standard rate of RPI. Also, the government will not remove the water discount scheme.
- The Plastic Packaging Tax will also be rising in line with CPI inflation. Though the government will also consult in 2026 on the introduction of mandatory certification for mechanically recycled plastic packaging for businesses to claim an exemption from the PPT. Finally, the Finance Bill will also include provisions for a mass balanced approach.
- The government will next year (expected early 2026) consult on the packaging Extended Producer Responsibility framework to measure how local authorities are using pEPR fees.
- The Packaging Recovery Notes mechanism will also be reviewed as the government plans to consult with industry on how to improve the scheme.
- Local Authority borrowing also increases for pressures such as SEND provisions, which may place pressure on budgets for investing in reuse and recycling initiatives.
Energy
- There will be a continued freeze in fuel duty, although a new mileage-based charge on electric vehicles will also be introduced from 2028 at 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids.
- Business rates relief of 100% will be applied over the next 10 years for EV chargepoints.
- Energy costs are planned to be redistributed. The Energy Company Obligation will end and the Warm Homes Discount scheme will be expanded, resulting in around 6 million households seeing lower bills.
- The Chancellor reaffirmed commitments to reduce electricity prices for energy intensive firms in the manufacturing sector. This policy, the British Industrial Competitiveness Scheme is now out for consultation.
- Grangemouth will also see up to £14m to support the transition to low carbon technologies.
- The Chancellor did not wholly commit to reforming nuclear regulation as regulatory costs continue to grow when deploying the technology. However, we can expect a formal response from the government to the Nuclear Taskforce recommendations in three months.
Gavin Graveson, CEO Veolia UK & Ireland said: "This was a missed opportunity for the Government to unlock investment in the UK’s circular economy and deliver green growth, jobs and infrastructure.
It is extremely disappointing that the Government has neglected to make any meaningful increase to the Plastic Packaging Tax (PPT), something the industry has made repeated requests for. By not increasing the PPT to £500p/t with a 50% mandatory recycled content threshold, the Government is seriously risking the investment needed for crucial domestic recycling infrastructure, providing green growth and green jobs.
We welcome the clarity that the Landfill Tax will remain as two separate rates, and that the Government has listened to industry concerns, but this alone will not solve the billion pound scourge of waste crime in this country. While sense over the rates has prevailed, we need a realistic plan to urgently tackle organised gangs undermining the legitimate operators.
It’s clear for all to see that the circular economy has a key role to play in driving growth in this country and there are further steps the Government could now take to accelerate this crucial industry.”
Other Potential Impacts For Your Business
- Productivity - Economic growth will continue to struggle, as productivity performance has again been downgraded.
- Inflation - Several upward pressures are adding to stubborn inflation, well above the Bank of England forecast, without returning to the 2% target until 2027.
- Industrial Growth - A new £30m fund will be invested into Cornwalls economic potential, covering critical minerals and renewable energy.
- Business Rates - A new rate will be in place for over 750,000 retail, hospitality and leisure properties. The new multipliers will be 5p lower than national equivalents.
- Artificial Intelligence - Three more AI Growth Zones were announced. The areas benefiting will be the North East, North Wales and South Wales.
- Public Private Partnerships - PPPs also make a return this year, following the 10-year infrastructure strategy commitment to reconsider their role in the government's infrastructure ambitions.
What's Next?
- The Government will now progress the Finance Bill through parliament to begin transitioning the announcements made today into law.
