HM Treasury updated Parliament on the UK government’s economic response to the conflict in the Middle East following the International Monetary Fund Spring Meetings, announcing a package to strengthen energy security and smooth the impact of energy price shocks. The package includes extending the Electricity Generator Levy beyond its scheduled 2028 end date and increasing the levy rate from 45% to 55%. Measures also include publishing further detail, ahead of legislation, on allowing tiebacks to existing North Sea fields to maximise production over field lifetimes, and accelerating renewables deployment through faster grid infrastructure, land access reform, extended permitted development rights and additional public land, which could unlock up to 10GW of new capacity. The higher levy is positioned as both a revenue source for support to households and businesses during periods of high gas prices and an incentive for older low-carbon generators, which supply about a third of UK power, to move from market pricing to fixed-price contracts for difference under proposals set out by the Energy Secretary. Reeves also referenced existing domestic steps to keep costs down, including extending the 5p fuel duty cut, taking GBP 150 off energy bills with additional help for heating oil, and expanding the British Industrial Competitiveness Scheme to more than 10,000 manufacturers to cut electricity costs from this year, alongside reporting a joint agreement with ten major economies to avoid unnecessary trade restrictions and coordinate domestic responses. Further details on North Sea tiebacks are intended to inform upcoming legislation, and the levy changes are linked to the next stage of electricity market reform focused on reducing the link between gas prices and retail electricity costs.
HM Treasury 2026-04-21
HM Treasury extends Electricity Generator Levy beyond 2028 and raises rate to 55% in Middle East conflict energy security package
HM Treasury updated Parliament on the UK government’s economic response to the Middle East conflict, announcing a package to strengthen energy security and mitigate price shocks, including extending the Electricity Generator Levy beyond 2028 and raising the rate from 45% to 55%. The package also sets out further detail ahead of legislation on allowing tiebacks to existing North Sea fields, accelerating renewables deployment, and using the higher levy to support households and businesses and incentivise older low-carbon generators to move to fixed-price contracts.