Our experts from the University of Sheffield give their reaction to Chancellor Rachel Reeves' Autumn Budget. They discuss the proposed changes to property tax, savings and investments, alcohol duties, apprenticeships, living wages, energy bills and business growth.
On the changes to electricity bills:
Typical household energy bills (at £1,725 per year) remain more than £450 higher than pre-crisis levels. Reeves is therefore pledging to “grip the cost of living” with a package of short- and long-term solutions.
Instead of axing the 5 per cent VAT paid on energy bills, as had been widely trailed, Reeves has removed certain social and environmental levies from electricity bills, which she says will save households up to £150. These levies funded government policies supporting vulnerable people and low-carbon technology adoption, which will now be paid for through general taxation.
This is a welcome progressive shift. Sharing these costs across all households disproportionately hurt people on lower incomes who paid the same percentage in levies as wealthier customers. What’s more, while these levies represent a relatively small chunk of people’s bills (about 16 per cent) compared to wholesale costs, removing them will help bring down energy-related inflation.
The chancellor is also rightly extending the warm homes discount scheme, which takes an additional £150 off some people’s electricity bills and which will now reach six million households. Yet the temporary discount does not reverse a decade of low, even substandard, government-backed energy-efficiency schemes.
However, the warm homes plan, which aims to improve energy efficiency in homes, will now receive an extra £1.5 billion to tackle fuel poverty. Done properly, investment in energy efficiency and low-carbon technologies can cut bills, improve people’s health and reduce emissions – a “win-win-win”.
Dr Andrew Burlinson, commenting for The Conversation
School of Economics
On the National Living Wage:
When the National Minimum Wage was introduced in 1999, it was designed to tackle the worst extremes of low pay, with the focus on avoiding adverse effects on employment. With the introduction of the National Living Wage (NLW) in 2015, the focus shifted to meeting a target related to median earnings.
The Low Pay Commission’s remit for the rate of the NLW in 2026 explicitly includes taking account of the cost of living, moving the focus beyond employment. The 4.1 per cent increase in the NLW takes this into account and reflects a balance between the effects on workers and businesses.
The National Minimum Wage rates for young people are shaped by the Government’s ambition to lower the NLW age of entitlement to 18. There, it will be interesting to see how businesses react to the 8.5 per cent (85 pence) in the 18-20 Year Old Rate. Of course, many businesses pay all workers the NLW regardless of age. However, some businesses are not able to do this due to the prevailing financial pressures. For example, the pressures faced by the hospitality sector, which employs a high proportion of young workers, are well-documented. It will be interesting to see how such sectors respond to these changes over the coming months.
Professor Sarah Brown
Head of the School of Economics
On apprenticeships:
It seems unlikely that the latest reform will create a significant financial incentive and encourage a substantial increase in apprenticeship offers by SMEs.
Although many SME employers view apprenticeships as an important potential means of filling skill gaps, the UK has seen a fall in the number of lower-level apprenticeships undertaken offered by smaller firms.
But compared to large organisations, SMEs are more likely to find it hard to dedicate resources to employing and training apprentices. The requirement that SMEs co-invest in apprenticeship training was removed in 2024 for apprentices under the age of 22, but the proportion of total training costs SMEs were required to cover was in any case small. Given the other challenges SMEs face in relation to apprenticeships, particularly with regard to retention, extending full government funding to apprentices aged 23 and 24 is likely to have at best a modest effect on SMEs' apprenticeship offers.
Professor Jason Heyes
University of Sheffield Management School
On the tax on electric vehicles:
The rationale of the new excise duty on electric vehicles (EVs) is to replace lost revenue from falling fuel duty and ensure all road-users contribute fairly.
However, this will likely reduce demand for electric cars (440,000 fewer EV sales according to the OBR) at a time when EVs make up less than a tenth of vehicles on UK roads. This does not only affect the amount to be raised from the excise duty but also, and more importantly, it can discourage switching to EVs leading to behavioural change that undermines environmental and climate goals such as achieving Net Zero, where an accelerated adoption of EVs is key.
Dr Eleni Stathopoulou
School of Economics
On alcohol duties:
The Chancellor's decision to increase alcohol duties in line with inflation today means that the price of alcohol should remain the same for consumers.
Freezing or cutting alcohol duties, as called for by the alcohol industry, would have come with significant costs to the public purse and led to increased levels of alcohol consumption and harm, putting further pressure on healthcare services. Freezes and cuts to duty under the previous government cost the Treasury tens of billions of pounds in lost revenue and previous analysis from the Sheffield Addictions Research Group estimated that thousands of lives had been lost as a result of the subsequent increases in alcohol consumption.
Professor Colin Angus
School of Medicine and Population Health
On the changes to the Cash ISA savings threshold:
The cash ISA threshold policy change is designed to encourage people to switch from a safe risk free investment, to place their money into company stocks, where arguably this should ultimately boost firms and economic growth.
Whilst the change in policy would appear to be beneficial it comes with caveats. Firstly, investing in stocks does not have a guaranteed return and is risky, unlike cash ISAs. Secondly, savings accounts and cash ISAs are relatively easy to access and convert into cash. This is not necessarily the case for investments in stocks.
Reducing the ISA threshold may not motivate people to switch to investing in stocks as the two groups of investors are likely to have very different attitudes towards risk. Those who invest in cash ISAs are likely to be risk averse and favour instant access to their money, which is the opposite to investing in stocks, so the extent to which individuals will substitute into stocks is debatable.
Professor Karl Taylor
School of Economics
On the new 'mansion tax':
Increasing council tax on expensive homes over £2 million is a small step in the right direction, but it lacks the ambition the country was promised. It is right that the wealthiest pay more, and it is right that unearned wealth via assets such as property are taxed appropriately, yet this watered-down ‘mansion tax’ alone will raise only a tiny sum (£400million), and not before 2028
Our housing system remains a key driver of the gap between rich and poor in society. Currently, a terraced house in Hartlepool pays more in council tax than a mansion in Mayfair, London. This is because council tax bands have not been revalued since 1991. In the 31 years since then, house prices have skyrocketed.
Yet, today the Chancellor missed the opportunity to change this by simply implementing a proportional property tax, which would see rates charged in line with market value. Such a policy would regional inequality and raise much needed public funds.
Unfortunately this budget reiterates that the government is shying away from making the necessary decisions to address the housing crisis, make our taxation system fairer and ensure hard working people are able to afford their rent and bills.
Dr. Abi O’Connor
University of Sheffield Management School
Today’s mansion tax announcement is bad news for wealthy homeowners, but may bring comfort to the rest of the market.
Whilst house prices in the UK fell by 1.8 per cent month-on-month in November 2025 (a larger fall than we usually see in November each year), some of this can be attributed to the uncertainty households faced in the wake of today’s budget.
The past few months have seen speculation that Rachel Reeves would introduce a much wider-set of housing reforms, including a recalibration of council tax bands, reforming stamp duty, or introducing a proportional property tax on houses valued over £500,000.
We now know that a mansion tax targeting houses valued above £2 million is the extent of housing market reforms in the budget, impacting an estimated 100,000 households. This provides some certainty to house-buyers and may lead to a recovery in housing transactions below this £2 million threshold.
Dr Emily Whitehouse
School of Economics
On business growth:
Scaling-up as a business is a weakness of the entrepreneurial ecosystem here in the UK. So the emphasis on supporting those struggling to fund growth is a positive focus, but could go much further.
There is an important issue here which is the need for talent to support scale-ups. Half of the UKs high-growth ventures are led by foreign founders which suggests the need to create a domestic talent pipeline to support scale-up businesses. And although there is some focus on supporting doctoral training centres to encourage entrepreneurship, Government could go a long way to address the issue by simply using the tools it already has, a mix of tax reliefs and incentives, as well as extending more support in areas like widening access to finance for female owned businesses which are currently securing funding at lower rates than their male counterparts.
Professor Vania Sena
University of Sheffield Management School
