The Budget 2026 contains a number of significant measures affecting environmental services, climate policy, land remediation, housing delivery, biodiversity, infrastructure and public finances. While the Budget provides welcome support for brownfield housing development, industrial decarbonisation and energy affordability, it stops short of addressing several longstanding barriers to environmental investment, most notably the absence of any review or reform of Land Remediation Relief.
Executive Summary
Budget 2026 seeks to balance fiscal discipline with economic growth, maintaining government borrowing on a downward trajectory while continuing significant public investment. The government states that borrowing will fall throughout the forecast period, with debt lower at the end of the forecast than today and fiscal rules met through a combination of targeted taxation measures and expenditure restraint.
For the environmental sector, the most notable announcements are:
- A new exemption from Biodiversity Net Gain (BNG) requirements for small residential developments on brownfield land up to 1.5 hectares.
- Continued backing for clean energy, grid infrastructure and industrial decarbonisation, including electricity cost reductions for energy-intensive industries and investment through the new Energy Wealth Fund.
- Planning and infrastructure reforms aimed at accelerating delivery of major projects and housing.
- Publication of further reforms to energy markets designed to reduce reliance on volatile gas prices and support electrification.
- Confirmation that the government will respond to the Alan Milburn review on young people not in education, employment or training (NEETs) before the end of the year, followed by a White Paper in early 2027.
However, no announcement was made regarding a review or enhancement of Land Remediation Relief, despite its importance in unlocking contaminated land regeneration, brownfield redevelopment and environmental clean-up projects. This remains a significant missed opportunity. The Budget contains extensive measures to support housing and brownfield regeneration but no corresponding commitment to improve fiscal incentives for remediation activity.
Brownfield Development and Biodiversity Net Gain
The Government has clearly prioritised housing delivery and brownfield regeneration. The headline environmental planning measure is the exemption of residential brownfield developments up to 1.5 hectares from Biodiversity Net Gain requirements. The Government argues this will make development “cheaper and simpler” while supporting a brownfield-first approach to housing delivery.
While this may accelerate smaller housing schemes, environmental stakeholders will want reassurance that nature recovery outcomes are not weakened and that brownfield redevelopment continues to incorporate proportionate environmental enhancement where feasible.
Land Remediation Relief: A Missed Opportunity
The Budget includes substantial support for housing delivery, urban regeneration and brownfield land. However, there was no announcement regarding a review of Land Remediation Relief. Across the environmental services sector, this will be viewed as a notable omission.
Land Remediation Relief remains one of the few tax mechanisms specifically designed to incentivise the clean-up of contaminated land. In the context of the Government’s ambition to unlock more brownfield housing, encourage regeneration and increase development viability, many in the sector had hoped for:
- A review of the effectiveness of Land Remediation Relief.
- Modernisation of qualifying criteria.
- Enhanced incentives for difficult contaminated sites.
- Stronger links between remediation, development and climate resilience objectives.
Without stronger remediation incentives, challenging brownfield sites may remain economically unviable despite planning reforms and BNG exemptions.
Climate Change and Net Zero
The Budget reaffirms the Government’s commitment to lower-carbon growth and energy security, although the emphasis is increasingly on affordability and competitiveness.
Measures include:
- Establishment of a new Energy Wealth Fund with £2 billion in capital support.
- Electricity bill reductions for over 10,000 energy-intensive manufacturers through the British Industrial Competitiveness Scheme.
- Continued investment in nuclear, renewable energy and grid expansion.
- Reform of energy pricing and removal of planned hydrogen levies on consumer bills.
- Freezing Climate Change Levy rates on electricity from 2028.
The Budget notably frames climate action increasingly through economic resilience, energy security and competitiveness rather than solely carbon reduction.
Environmental Regulation and Natural Capital
The Government continues its wider programme of regulatory reform, including exploration of more efficient environmental regulation and land management systems whilst maintaining environmental protections.
The new Better Regulation Executive and proposals to reduce administrative burdens may create opportunities to streamline environmental permitting, planning and regulatory processes. However, implementation will need careful scrutiny to ensure environmental outcomes are not compromised.
Fiscal Position, Debt and Borrowing
The Budget is strongly framed around fiscal discipline.
Key fiscal indicators include:
- Stability rule met with £15 billion of headroom in 2029-30.
- Investment rule met with £24 billion of headroom.
- Public sector borrowing falling from 4.2% of GDP to 1.8% by 2031-32.
- Debt forecast to be lower at the end of the forecast period than today.
- OBR forecasts approximately £14 billion per year in additional debt interest costs driven by global instability and higher borrowing costs.
For environmental businesses, the commitment to maintaining investment while reducing borrowing provides some certainty around future infrastructure and energy programmes, although pressure on public spending remains evident.
Milburn Review and Skills
The Budget confirms government support for Alan Milburn’s review into young people not in employment, education or training. The Government states it will respond to the final report before the end of the year and publish a White Paper in early 2027.
This is particularly relevant for environmental industries facing ongoing recruitment and skills shortages across:
- Environmental consultancy.
- Land remediation.
- Waste and resource management.
- Air quality.
- Water management.
- Environmental monitoring.
- Green infrastructure and climate resilience.
The environmental sector should position itself to benefit from future employment and apprenticeship reforms flowing from the Milburn recommendations.
“This Budget contains several welcome measures that could help unlock brownfield development, support industrial decarbonisation and strengthen the UK’s long-term energy security. The exemption of smaller brownfield developments from Biodiversity Net Gain requirements and continued investment in clean energy infrastructure demonstrate a clear desire to accelerate growth and housing delivery.
However, the Environmental Industries Association is disappointed that no review of Land Remediation Relief was announced. If the Government is serious about bringing difficult brownfield sites back into productive use, remediation incentives must form part of the solution. Cleaning up contaminated land delivers economic growth, environmental improvement and housing delivery simultaneously.
We also welcome the Government’s commitment to respond to the Milburn Review before the end of the year. With significant skills shortages across the environmental services and technology sector, future employment and skills reforms represent a major opportunity to connect more young people with high-quality careers that support the UK’s environmental, infrastructure and climate resilience ambitions.” Michael Lunn, CEO, Environmental Industries Association
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