PolicyLens

Methodology note

Cut net-zero subsidies by GBP 1.6bn: calculation note

Scenario assumptions behind the Cut net-zero subsidies by GBP 1.6bn estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Cut net-zero subsidies by GBP 1.6bn

Central fiscal result

-GBP 0.8bn - Net fiscal impact in 2028-29

Low case: -GBP 1.6bn. High case: +GBP 1.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model GBP 1.6bn green-subsidy saving as high-delivery case.
  • Central case assumes GBP 0.8bn removable by 2028-29.
  • Baseline uses current energy and environmental receipts context.
  • Excludes wider carbon-tax repeal and ZEV mandate changes.

Affected population

  • Affected population is subsidised firms, households and projects.
  • Direct exposure depends on unidentified schemes.
  • Indirect exposure includes supply chains and consumers using subsidised technologies.
  • Contracted projects may not be cut immediately.

Gross impact

  • Party saving claim: GBP 1.6bn.
  • Central saving: half claim, GBP 0.8bn.
  • High-cost case includes compensation and higher future support costs.
  • Private-investment loss is described, not fiscal-scored.

Fiscal build-up, central case

  • Cancelled subsidy spending: -GBP 1.0bn
  • Contract and transition costs: +GBP 0.1bn
  • Higher replacement support: +GBP 0.1bn
  • Lost receipts from weaker investment: GBP 0.0bn

Central net impact: -GBP 0.8bn in 2028-29.

Behaviour and pass-through

  • Low case assumes most targeted subsidies are discretionary and cancellable.
  • Central case assumes some schemes are contracted or already committed.
  • High-cost case assumes compensation and future catch-up support exceed near-term savings.
  • Private investment may fall more than public saving.
  • Consumer-price effects depend on pass-through.

Phasing

  • 2026-27: -GBP 0.2bn. Preparation or partial implementation.
  • 2027-28: -GBP 0.6bn. Main ramp-up year.
  • 2028-29: -GBP 0.8bn. Target-year central estimate.
  • 2029-30: -GBP 0.8bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • obr-efo-oct-2024: OBR October 2024 forecast; fuel-duty, energy and oil-gas receipts.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • goulder-parry-2008: Environmental policy design; informs behavioural and incidence assumptions.
  • dechezlepretre-sato-2017: Regulation and competitiveness; informs behavioural and incidence assumptions.