Spring Budget 2026: Energy Measures for Lancashire Homeowners

The Spring Budget 2026 included several measures relevant to Lancashire homeowners looking to improve their home’s energy efficiency. The headline announcements include an extension of the government heat pump grant, continued 0% VAT on energy-saving materials, new funding for home retrofit programmes, and additional support for fuel-poor households. Here is what was announced and how it affects energy plans for Lancashire homes.

government heat pump grant Extended

Government grants of up to £7,500 towards heat pump installations has been confirmed to continue through 2027 and into 2028. This provides certainty for Lancashire homeowners who are considering a heat pump but have not yet committed. The extension removes the urgency of applying before a potential scheme closure and gives the installer market more time to build capacity.

The government has also committed additional funding to the scheme, reflecting the higher-than-expected uptake in 2025. Budget documents indicate that government grant scheme funding will support up to 120,000 installations nationally in 2026/27, up from the approximately 80,000 vouchers issued in 2025.

For Lancashire homeowners, this is straightforwardly good news. The government grant (currently up to £7,500, subject to eligibility) remains the most significant financial incentive for switching from gas or oil to a heat pump. Combined with 0% VAT (also extended – see below), the out-of-pocket cost of a heat pump continues to be substantially lower than the full market price.

0% VAT Extended on Energy-Saving Materials

The zero rate of VAT on energy-saving materials, originally set to expire in March 2027, has been extended to March 2030. This covers solar panels, heat pumps, insulation, batteries, and other qualifying measures installed in residential properties.

The extension to 2030 provides a longer planning horizon for Lancashire homeowners considering phased improvements. If you install solar panels this year and plan to add a battery in 2028, both installations will benefit from the 0% rate. The total saving on a typical solar-plus-battery system is £1,500 to £2,500 compared to the standard 20% rate.

There is growing expectation that the 0% rate will eventually be made permanent. The extension to 2030 is a strong signal of long-term government commitment, but formal confirmation of a permanent zero rate would provide even greater certainty for the industry and consumers.

Additional Retrofit Funding

The Budget announced a new tranche of funding for local authority-led home retrofit programmes. Details are still being confirmed, but the allocation includes £500 million nationally for social housing retrofit through the social housing energy programme (social housing energy programme), additional Home Upgrade Grant (HUG) funding for off-gas-grid homes in England, and continuation of the government insulation scheme (government insulation scheme) with expanded eligibility criteria.

For Lancashire, the HUG funding is particularly relevant. The county has thousands of off-gas-grid homes in rural areas – the Ribble Valley, Forest of Bowland, and parts of the Fylde – that rely on oil, LPG, or electric heating. HUG funding can provide free or heavily subsidised insulation and heating upgrades for these properties, with air source heat pumps replacing oil boilers as the primary measure.

The social housing energy programme funding benefits social housing tenants across Lancashire. Registered social landlords (housing associations and council housing arms-length management organisations) will use the funding to insulate and upgrade heating in their housing stock. Tenants in social housing do not need to apply individually – their landlord manages the programme.

Fuel Poverty Support

The Budget confirmed continuation of the winter energy discount scheme at £150 per year for qualifying households, along with the winter fuel support payment for pensioners (though the recent restrictions on eligibility remain). There was no announcement of further one-off cost-of-living payments for energy bills, reflecting the government’s view that the worst of the energy crisis has passed.

For Lancashire’s fuel-poor households, the most impactful Budget measure is the continued funding for ECO-type schemes that permanently reduce energy bills through home improvements. A one-off payment of £150 helps with this winter’s bills, but insulation that may save an estimated £200 to £400 every year for decades is transformative.

Lancashire has above-average fuel poverty rates, with an estimated 15% to 20% of households spending more than 10% of their income on energy. Areas like Burnley, Hyndburn, Pendle, and Blackburn with Darwen have some of the highest rates in England. The Budget’s funding commitments, while not specifically targeted at Lancashire, will flow through to these areas via the national schemes.

Standing Charges: No Change Yet

Despite growing public concern about energy standing charges (which cost Lancashire households around £340 per year regardless of usage), the Budget did not announce any reform. The government stated it is reviewing the structure of energy bills but offered no timeline for changes.

Standing charges are particularly controversial for Lancashire homeowners who have invested in solar panels and batteries, as they pay the same daily charge as high-usage households despite importing very little from the grid. Reform proposals include moving some standing charge costs into unit rates, capping standing charges at a lower level, and creating different charge structures for microgeneration households.

Any reform is likely to be complex and politically sensitive, as reducing standing charges means increasing unit rates (which would raise bills for high-usage households) or finding alternative funding for the network and policy costs currently recovered through standing charges.

Green Skills and Training

The Budget included £200 million for green skills training across the UK, aimed at increasing the number of qualified heat pump installers, solar engineers, and insulation specialists. Lancashire colleges including Burnley College, Myerscough College, and Blackpool and The Fylde College are expected to benefit from this funding through expanded training programmes for heating engineers transitioning to renewable technologies.

The installer shortage has been a consistent brake on heat pump deployment in Lancashire. More trained engineers means shorter wait times, increased competition (which helps keep prices competitive), and better service quality as the most skilled engineers can be selective about the work they take on.

What Lancashire Homeowners Should Do Next

The Budget’s energy measures are broadly positive for Lancashire homeowners planning efficiency improvements. The continued government grant, extended 0% VAT, and additional retrofit funding create a supportive environment for investment. Here are the practical takeaways:

• If you have been considering a heat pump, a government grant scheme extension to 2028 removes time pressure, but there is no financial advantage to waiting. Apply now to benefit from current pricing and installer availability.
• If you are planning solar panels or a battery, the 0% VAT extension to 2030 gives you a long window to complete phased installations.
• If you are on a low income or in a poorly insulated home, check your eligibility for government energy efficiency schemes, government insulation scheme, and any new funding streams that emerge from the Budget allocations. Your local council is the best starting point.
• If you are a landlord, the direction of travel towards higher minimum EPC standards means investing in your properties’ energy efficiency is a matter of when, not if.

Does the Budget affect the energy price cap?

Not directly. The the energy price cap is set independently based on wholesale energy costs and network charges. Budget measures like VAT changes and levy rebalancing can indirectly influence the cap, but the Spring Budget 2026 did not include any measures that would change the Q2 2026 cap already announced.

Will there be a new green homes grant scheme?

The Budget did not announce a new homeowner-facing grant scheme comparable to the short-lived previous government grant scheme voucher of 2020/21. Instead, the government is channelling funding through existing mechanisms – government energy efficiency schemes, government grant scheme, government insulation scheme, and local authority programmes. This approach is less visible to consumers but provides more stable, long-term funding for home improvements.

How can I find out which Budget measures I qualify for?

Contact your local Lancashire council’s housing or energy team for personalised advice on which schemes apply to your circumstances. The Simple Energy Advice helpline also provides free guidance on national schemes. Most of the Budget measures are delivered through existing programmes, so if you already qualify for government energy efficiency schemes or government grant scheme, you continue to qualify under the extended funding.