Households heating their homes with oil will be spared kerosene import tariffs until December 2028 and most families in England will receive a £100 energy payment from January, under the Budget set out by Chancellor John Healey on Wednesday. But the biggest single change to household energy bills, the abolition of gas standing charges, will bypass the many rural homes that are not connected to the gas grid.
The Budget document confirms a £2.6bn Household Energy Payment of £100 for up to 20 million households in council tax bands A to D, paid through the council tax system, with a further £100mn for councils to support hard-hit households in higher bands. The government says the payment will reach 83% of fuel-stressed households. Ministers have also asked Ofgem to scrap gas standing charges, currently worth an average £108 a year, by the end of 2027, and extended zero-rate VAT on domestic electricity to July 2027.
For off-grid homes the main measures are the suspension of tariffs on kerosene heating oil, which the Treasury says supports “many in rural areas and Northern Ireland”, and more than £50mn of targeted help for low-income oil-heated households first announced in March. Almost a third of homes in majority-rural constituencies are off the gas grid, and fuel-poor rural households face an average shortfall of £824 compared with £311 in urban areas, according to a recent report by rural policy group Equal Ground reported by Farmers Weekly.
On housing supply, the Chancellor added £1.5bn to the Social and Affordable Homes Programme for around 10,000 extra homes, prioritised for social rent, and removed VAT from land sales to registered social housing providers. A £4.7bn Your First Home scheme will offer first-time buyers a 20% equity loan on new-build homes, with a household income cap of £110,000 outside London, Propertymark reported. The Office for Budget Responsibility expects the scheme to have “only a marginal effect on housing supply” and has cut its housebuilding forecast by 190,000 homes, Construction Magazine reported.
Landlords face a further two-point rise in tax on property income from April 2027, to 24%, 44% and 49%, while a new surcharge of £2,500 to £7,500 a year will apply to homes worth £2mn or more from April 2028. Timothy Douglas of Propertymark called the landlord rise “a further disincentive to potential landlords” and said buyer support “must extend beyond buyers of new-build properties”.
Cllr Eamonn O’Brien, chair of the Local Government Association, said extra money for social housing was “positive”, but warned that flat council funding would leave authorities struggling to meet demand. NFU president Tom Bradshaw said the Budget felt like “tinkering while Rome is burning”.
In villages where homes rely on oil, private lets make up much of the rental market and new-build schemes are scarce, the Budget’s housing and energy measures will reach rural households unevenly, with much depending on how councils and the forthcoming 10 Year Plan direct the new affordable housing money.
Sources: HM Treasury, Budget 2026 · Propertymark · Construction Magazine · Local Government Lawyer · NFU · Farmers Weekly. Featured image: Village street, East Coker, by Derek Harper / geograph.org.uk, CC BY-SA 2.0.
