What Does the Autumn Budget Mean For the UK Energy Sector?

During the new Labour Government’s first budget address on 30th October, UK Chancellor Rachel Reeves pledged to “get Britain building again”. As part of this, she issued a series of climate and clean energy commitments.  

These spending plans include greater investment in planning departments, more funding for heat pump grants, confirmation of funding for commercial hydrogen projects, and additional cash for the Department of Energy Security and Net Zero (DESNZ) – more than doubling its total budget to around £14.1 billion in 2024-25.

In today’s blog article, we are going to take a closer look at Reeves’ announcements and share our opinions on the potential implications for the UK energy sector in the coming years.

Introduction of Great British Energy

The formation of a state-owned energy company, Great British Energy, marks a significant shift in the UK's approach to solar, wind and hydrogen investments. While the Government has historically relied on private-sector financing for large-scale projects, Great British Energy aims to change that by directly funding clean energy initiatives across the UK. For those interested, some of our employees spoke about GB Energy at length in a previous blog.  

GB Energy will be headquartered in Aberdeen, Scotland, drawing from the city’s renowned engineering expertise and importance in the wider UK landscape. Two smaller sites will be created in Edinburgh and Glasgow, with an impressive £8.3 billion allocated over the next five years. An interim chief executive will soon be appointed to take the lead, with help from start-up chair Juergen Maier, ex-CEO of Siemens UK.

Scheduled to receive £125 million in 2025 alone, this pledge will be backed up with £70 billion in private investment, intended to stimulate additional growth sectors. However, it’s important to note that North Sea jobs have been in serious decline for many years. There’s still no additional information on the number of jobs GB Energy is expected to create, and reactions in the market are clearly divided—with optimism prevalent in Scotland, while others view it as a potential 'white elephant.

For now, data from the OEUK trade association shows that the oil and gas sector supports around 30,000 direct and 100,000 indirect jobs across the UK. Robert Gordon University predicts a decline of around 30,000 jobs over the next decade. We expect new oil and gas licences to have a marginal effect on future jobs.

So the budget presents a mixed picture for North Sea activity overall. We know established operators like ExxonMobil and smaller firms such as Serica are abandoning a mature and declining North Sea basin, and exploring opportunities overseas, there is not much clarity on what is likely to happen after 2030.  

Nevertheless, Richard Madden, CEO of WeConnect Energy, believes that the commitment should make some difference for Aberdeen and the surrounding region, “the city is home to over 1,000 energy supply chain companies. It has the right people, skills and strategic infrastructure, as well as a future pipeline of projects already in place.”

In a similar vein and on the back of the announcements, Richard expressed concerns about the windfall tax on North Sea oil and gas producers: “You don’t need to sacrifice one industry to build another – in fact, the opposite is the case. Ripping the plaster is not always the most sensible option."  

Richard continues by suggesting that this shift should be seen as an evolution rather than a complete transition, with both traditional and renewable industries playing vital, complementary roles—fully echoing the sentiments of over 1,500 skilled and experienced energy workers who participated in our Salary Surveys this year.

Helping Planning Departments to Unlock Renewables

Bureaucratic slowdowns in planning approvals have long been a thorn in the side of renewable energy projects in the UK. As well as impacting solar and wind developments, these delays also create bottlenecks for essential grid upgrades and associated infrastructure. In an effort to address this, Reeves has committed £46 million to hire 300 new planning officers.

This plan is accompanied by a further £5 million to streamline the planning regime for Nationally Significant Infrastructure Projects (NSIPs). This allocation is expected to reduce the timeframe for approval processes, especially for projects with over 50 MW capacity.  

Today, planning delays can add up to two years to some projects. A new fast-track consent route should last around four months, instead of the current six. By cutting down on these delays, the government is making a crucial move toward meeting renewable energy targets faster and more efficiently.

Heat Pump Grants to Tackle Domestic Carbon Emissions

Whilst we wouldn’t normally comment on announcements that impact on private households, some Budget topics could also influence the wider job landscape, making them worth mentioning.

Heating is responsible for around a third of the UK's carbon emissions, making it a critical area for climate action. The Boiler Upgrade Scheme (BUS), first launched in 2022, has been instrumental in encouraging households to switch from gas boilers to heat pumps.  

The government has now expanded this scheme as part of the £3.4 billion Warm Homes Plan, which also includes £1.8 billion directed at fuel poverty relief.  

According to the Department for Energy Security and Net Zero, 55,095 BUS applications were received by September 2024, with air-source heat pumps comprising 97% of applications. The additional funding will increase accessibility for lower-income households and incentivise manufacturers to scale up production.  With the average heat pump installation costing £13,000 and BUS grants covering up to £7,500, this move could mark a substantial shift in the way we heat our buildings.