Next week, the Chancellor Rachel Reeves MP will unveil the Government’s Spending Review, setting out the budgets for all Government departments for the next three years.
With the Department for Energy Security and Net Zero (DESNZ) reportedly having reached a final settlement with the Treasury, the Brevia Energy team sets out what we expect to see.
Winter Fuel Payment U-turn
Following weeks of speculation and mounting pressure, the Chancellor conceded that the Government will reverse the previously announced cut to the Winter Fuel Payment. The cut, initially announced back in October, would have limited eligibility to those in receipt of pension credit, effectively shifting to a means-tested model.
While full implementation details are yet to be released, one option under consideration would see payments to wealthier recipients recouped through the tax system. The Chancellor is expected to share further information at the upcoming Spending Review, with full details to be set out at the Autumn Budget.[1]
Warm Homes Plans
The flagship £13.2 billion Warm Homes Plan is now expected to be spared from cuts, following days of behind-the-scenes negotiation.
The Warm Homes Plan offers grants and low-interest loans for insultation and energy saving installations. The prospect of funding reductions had drawn sharp criticism from campaign groups, who warned that any rollback would harm efforts to improve the UK’s poorly insulated housing stock — with particularly negative effects on vulnerable households.[2]
Ministers are also reportedly considering a ‘Clean Heat’ discount that would exempt households with heat pumps from paying green levies on their electricity bills in a bid to incentivise heat pump uptake.[3]
Bold Pledges on Infrastructure
The Chancellor is expected to frame this Spending Review as a growth-driven reset, with major infrastructure announcements forming a central theme. A £15 billion transport funding package has already been confirmed for mayoral authorities across the Midlands, the North, and the West Country, including support for bus electrification in Greater Manchester.[4] Further infrastructure commitments are likely, with a focus on areas seen as under threat from the growing presence of Reform.
Sizewell C: Final Investment Decision
Progress on the Final Investment Decision (FID) on Sizewell C is also expected to be announced, providing a long- awaited signal of commitment to new nuclear capacity. However, the FT has reported that final approval for the project is not expected until the Anglo-French summit taking place in London next month.[5]
Alongside a formal commitment to Sizewell C, the Chancellor is also expected to announce the outcome of the Small Modular Reactor (SMR) selection process.
Industrial Strategy
Another publication to look out for is the delayed Industrial Strategy. The Strategy, will set out policies aimed at supporting the growth in the eight previously identified ‘growth-driving sectors’, including clean energy.
The Strategy is likely to address long-standing concerns around the competitiveness of energy-intensive industries, particularly in the wake of steel tariff debates. Key themes are likely to include support for domestic manufacturing of strategic components (such as EV batteries, wind turbine parts, and hydrogen equipment) and efforts to build greater supply chain resilience by reducing reliance on single-country sourcing.
A busy week ahead
Next week’s Spending Review will shape departmental budgets and policy direction for the next three years. For the Department for Energy Security and Net Zero in particular, the settlement will determine the scale and pace of delivery on energy efficiency, infrastructure investment, and industrial decarbonisation.
Brevia Energy is a dedicated division of Brevia Consulting, and has a longstanding reputation for its expertise and experience in the Energy Sector.
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Notes
[1] Sky News, ‘Spending review 2025: How much cash will Rachel Reeves give to each government department?’, 5 June 2025, Link
[2] E3G, ‘Cutting the insulation budget puts statutory fuel poverty and climate targets at risk, warn leading charities’, 28 May 2025, Link
[3] Financial Times, ‘UK ministers consider electricity bill discounts for heat pump owners’, 5 June 2025, Link
[4] HM Treasury, ‘Biggest ever investment in city region local transport as Chancellor vows the Renewal of Britain’, 4 June 2025, Link
[5] Financial Times, ‘Sizewell C nuclear project to get go-ahead during Anglo-French Summit’, 3 June 2025, Link
