Reeves announces a £150 reduction in energy bills for millions starting in April 2026.

Rachel Reeves has announced a new £150 reduction in household energy bills, which will take effect in April 2026, as part of her inaugural Budget as Chancellor.

This initiative aims to alleviate cost of living challenges and will be implemented through modifications in the calculation of energy bills, rather than as a one-time payment. Average annual bills are projected to decrease by approximately £150, with this reduction automatically applied to household tariffs.

The £150 reduction will complement existing support programs like the Warm Home Discount. For lower-income households already receiving targeted assistance, this could result in total savings of up to £300 annually on energy expenses.

The government indicated that this policy will benefit millions of households, with the most significant advantages for those most impacted by recent spikes in energy prices. Those on both fixed and variable tariffs are anticipated to experience the reduction, allowing households that secured deals during winter to see prices decrease further in April without switching suppliers.

Major energy companies such as British Gas, Octopus Energy, and E.ON Next are expected to fully pass on the savings to their customers.

The £150 reduction is part of Reeves’ broader Budget strategy, which focuses on establishing "strong foundations" for the economy while reducing inflation and government debt.

Prime Minister Keir Starmer has associated this move with a wider commitment that 2026 will signify a pivotal moment for household finances after several years of elevated costs.

Households will not need to apply for the £150 reduction, as it will be automatically integrated into energy pricing. However, consumers are still encouraged to verify their eligibility for local council assistance and other programs, which can be combined with the bill cut for additional savings.