Chancellor Rachel Reeves has announced a significant financial boost for millions of households across the United Kingdom, with average annual energy bills set to fall by £150.
Substantial Savings to Begin in April
The tangible benefits of this policy will start to be felt by consumers from April 2026. This follows a period dominated by intense cost-of-living pressures. The changes to how households are charged for their energy were formally announced in the Budget.
Major energy suppliers, including British Gas, Octopus, and Eon, have confirmed they will pass the savings directly to customers. This applies to those on both variable tariffs and, notably, to those who have sought to lock in rates with fixed-term deals.
Fixed Tariff Customers Also Benefit
In a move that offers reassurance to many, the government has confirmed that customers on fixed tariffs will not miss out. Richard Neudegg, director of regulation at Uswitch, explained the double benefit for these households.
"Households can now confidently sign up with these suppliers for a fixed deal that will effectively save them money twice," he said. "They can secure cheaper rates now during the coldest months of winter, and they’ll see their prices drop even further in April without having to take any further action."
It is important to note that there will be a minor adjustment to bills before the main cut takes effect. From January 2026, a very slight rise of approximately £3 per year will be applied, making the substantial April reduction even more impactful.
A Year of Renewed Hope
Prime Minister Keir Starmer has framed 2026 as the year the British public will begin to feel materially better off as a direct result of Labour government policies. In a recent New Year statement, he outlined his vision for the coming months.
"In 2026, the choices we've made will mean more people will begin to feel positive change in your bills, your communities and your health service," Starmer stated. "But even more people will feel once again a sense of hope... my government will make it that reality."
He directly linked this announcement to a broader agenda of renewal, listing "energy bills down" alongside more police on the streets and increased funding for local communities as key milestones for the year.
This intervention marks a concerted effort to alleviate the financial strain that has characterised the first half of the 2020s, offering a clear, quantifiable reduction in a major household expense for millions.
