Rishi Sunak confirms he’s delaying ban on new petrol and diesel cars and boosts boiler upgrade scheme
Rishi Sunak has confirmed he will be easing a series of green policies under a “new approach” designed to protect “hard-pressed British families” from “unacceptable costs”.
Delivering a speech from Downing Street, he said he is still committed to reaching net zero by 2050, but the transition can be done in a “fairer and better way”.
Announcing a raft of U-turns, the prime minister confirmed he will delay a ban on the sale of new diesel and petrol cars by five years and a weakening of targets to phase out gas boilers.
He also said a “worrying set of proposals” that had emerged during debates on net zero would be scrapped, including:
- For government to interfere in how many passengers you can have in your car
- To force you to have seven different bins in your home
- To make you change your diet and harm British farmers by taxing meat
- To create new taxes to discourage flying or going on holiday
“Our destiny can be of our own choosing,” Mr Sunak said – while calling for politicians to be “honest” about the costs of green policies on families.
Politics live: Rishi Sunak gives speech from Downing Street
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‘No rights to impose costs on people’
The measures have faced criticism from across the political spectrum as well as from businesses, environmental groups and even former US vice president Al Gore.
Labour accused the prime minister of “dancing to the tune” of net zero-sceptic Tories and said the plans would actually add more costs to households while damaging investor confidence.
Explaining the government’s decision to delay the ban on the sale of new petrol and diesel cars – currently due in 2030 – by five years, Mr Sunak said this would give businesses “more time to prepare”.
He also said people would still be allowed to buy secondhand diesel and petrol cars after that date and this would align the UK’s approach with countries across Europe, Canada and many US states.
In weakening the plan to phase out gas boilers from 2035, Mr Sunak said households would “never” be forced to “rip-out their existing boiler and replace it with a heat pump”.
This will only be required when people are due to change their boiler anyway and there will be an exception for households for whom that will be the hardest.
Mr Sunak also announced an increase to the boiler upgrade scheme, saying rather than banning boilers “before people can afford the alternative” the government is going to “support them to make the switch” to heat pumps.
He said: “The boiler upgrade scheme which gives people cash grants to upgrade their boiler will be increased by 50% to seven and a half thousand pounds.
“There are no strings attached. The money will never need to be repaid.”
Landlord efficiency targets scrapped
Mr Sunak has also scrapped plans to force landlords to upgrade the energy efficiency of their properties, saying some property owners would have been forced to “make expensive upgrades” within two years and that would inevitably impact renters.
“You could be looking at a bill of £8,000, and even if you’re only renting, you’re more than likely to see some of that passed on in higher rents,” he said.
“That’s just wrong, so those plans will be scrapped.”
Despite the “new approach”, the prime minister insisted the UK would meet its international obligations on climate change – such as those made under the Paris Climate Accords.
He went on to defend the UK’s record, arguing the country is “so far ahead” of other countries in the world when it comes to cutting greenhouse gas emissions.
PM wants to portray himself as a leader prepared to take unpopular decisions his predecessors weren’t
For all the rhetoric about democracy and real political change – today’s speech was fundamentally about the Prime Minister giving into the concerns of many in his party about the costs of the green policies set out by Boris Johnson’s government.
Labour see these announcements as projecting fundamental political weakness: 20 points behind in the polls and struggling to meet the majority of his five pledges, Rishi Sunak urgently needs to find a way to connect with voters struggling during the cost of living crisis. He’s keen to win over the right wing Tory backbenchers concerned about the electoral danger of expensive environmental policies like the ULEZ expansion which was widely seen to have cost Labour the Uxbridge by election.
It’s an impression underlined by the hurried way the announcement was made – less than 24 hours after these controversial change in tack was leaked to the media, prompting a huge backlash from business and many in his own party. Making such a key speech in the Downing Street media briefing room – rather than to Parliament, also looks chaotic.
It’s sent the Speaker into a fury, earning a humiliating rebuke. “Ministers are answerable to MPs – we do not have a presidential system here,” Sir Lindsey Hoyle thundered. For a man like Mr Sunak, who prides himself on being a sensible pragmatist – the complete opposite to the cavalier Boris Johnson – it’s surely a criticism that will sting, though it’s hardly unexpected.
The irony is that Rishi Sunak opened his speech by pledging to put the long term interests of the country before the short term political needs of the moment. Climate campaigners, for whom nothing could be more urgent, will surely scoff at this.
But in the framing of his speech – as the first of a series of long term policy decisions in a ‘new kind of politics’ – the Prime Minister and his team are keen to burnish his reputation as a pragmatic reformer, prepared to take the kind of unpopular decisions his predecessors weren’t. Certainly many in his party have been calling for a change in approach, a new bolder strategy to set out a greater distance with Labour – and it seems he has been listening.
The PM’s key arguments – that government shouldn’t impose unnecessary or heavy handed costs on hard working people, and relying on the market to drive change – are a return to classic Conservatism.
But his core argument that the need for action is less urgent than we have previously been led to believe, because of the UK’s success in meeting existing climate targets – is not one which will sit easily with green minded MPs.
And while he spent a key part of the speech concentrating on the importance of green technological innovation, and celebrating the power of the market in delivering progress – that will surely stick in the throat of companies who’ve spent billions getting ready to meet targets which have now been delayed. Many in his own party are concerned about the reputational damage to the UK as a centre of business investment.
He’s well aware that today’s message will be deeply unpopular with some – but promised to ‘meet any resistance’. Many Tory MPs will welcome that more bullish approach; but his promise to deliver ‘pragmatism and not ideology’ is pure Sunak.
The question now is in the hands of voters – do they buy into this argument that the country can reach Net Zero by 2050 without many of the policies designed to get there? Or in the midst of the cost of living crisis – will they be delighted to avoid the cost of paying for them?
‘Act of weakness’
Among the critics, Ed Miliband, Labour’s Shadow Energy Security and Net Zero Secretary, said: “Today is an act of weakness from a desperate, directionless prime minister, dancing to the tune of a small minority of his party. Liz Truss crashed the economy and Rishi Sunak is trashing our economic future.
“Having delivered the worst cost of living crisis in generations, the prime minister today loads more costs onto the British people.”
Lib Dem leader Ed Davey said: “This is a prime minister who simply doesn’t understand and cannot grasp for Britain the opportunities for jobs and our economy of driving forward with action on clean energy.”
There was also criticism from the car industry and energy industry.
Chis Norbury, the chief executive of the E.ON energy firm, said it was a “false argument” that green policies can only come at a cost, arguing they deliver affordable energy while boosting jobs.
He said companies wanting to invest in the UK need “long-term certainty” while communities now risk being condemned to “many more years of living in cold and draughty homes that are expensive to heat”.
Ford cars UK chairwoman Lisa Brankin said: “Our business needs three things from the UK Government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three.”
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Rishi Sunak is asked if his net zero policy climbdowns are a result of him panicking about the next election.
Tory MPs split
The announcement comes after last night’s leak of the plans sparked a major Tory backlash and even a threat of a no confidence letter.
Mr Sunak was due to give the speech later this week but brought it forward following a hastily arranged cabinet meeting this morning.
Commons Speaker Sir Lindsay Hoyle reacted furiously to the announcement not being made to MPs, who are on recess for conferences, expressing his views “in the strongest terms” in a letter to Mr Sunak.
Tory MPs are split, with some seeing the row back on costly green policies as a vote winner and others fearing the impact it will have on business and the climate.
Senior figures who have backed the prime minister include his predecessor Liz Truss, who said: “I welcome the delay on banning the sale of new petrol and diesel cars as well as the delay on the ban on oil and gas boilers. This is particularly important for rural areas.”
Read more:
Braverman: ‘Bankrupting Britons won’t save planet’
Sunak’s messaging suggests net zero is negotiable
What could be scrapped from net zero pledges?
However Boris Johnson, who Ms Truss briefly took over from, said the row back would cause uncertainty for businesses, adding: “We cannot afford to falter now or in any way lose our ambition for this country.”
Mr Johnson’s ally and prominent Tory environmentalist Lord Zac Goldsmith went as far as to demand a general election over the “economically and ecologically illiterate decision”.
The UK’s commitment to reach net zero by 2050 was written into law in 2019.
Climate scientists say urgent cuts are needed to the world’s greenhouse gas emissions if we are to stop temperatures rising to a potentially catastrophic extent.
In the summer, scientists warned extreme heat events were rapidly on the rise due to climate change.
The Bank of England sees trouble ahead for global financial markets if investors U-turn on the prospects for artificial intelligence (AI) ahead.
The Bank‘s Financial Policy Committee said in its latest update on the state of the financial system that there was also a risk of a market correction through intensifying worries about US central bank independence.
“The risk of a sharp market correction has increased,” it warned, while adding that the risk of “spillovers” to these shores from such a shock was “material”.
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Fears have been growing that the AI-driven stock market rally in the United States is unsustainable, and there are signs that a growing number of investors are rushing to hedge against any correction.
This was seen early on Wednesday when the spot gold price surpassed the $4,000 per ounce level for the first time.
Analysts point to upward pressure from a global economic slowdown driven by the US trade war, the continuing US government shutdown and worries about the sustainability of US government debt.
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US government shuts down
The political crisis in France has also been cited as a reason for recent gold shifts.
Money has also left the US dollar since Donald Trump moved to place his supporters at the heart of the US central bank, repeatedly threatening to fire its chair for failing to cut interest rates to support the economy.
Jay Powell’s term at the Federal Reserve ends next spring but the White House, while moving to nominate his replacement, has already shifted the voting power and is looking to fire one rate-setter, Lisa Cook, for alleged mortgage fraud.
She is fighting that move in the courts.
Financial markets fear that monetary policy will no longer be independent of the federal government.
“A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp repricing of US dollar assets, including in US sovereign debt markets, with the potential for increased volatility, risk premia and global spillovers,” the Bank of England said.
British government borrowing costs are closely correlated with US Treasury yields and both are currently elevated, near multi-year highs in some cases.
It’s presenting Chancellor Rachel Reeves with a headache as she prepares the ground for November’s budget, with the higher yields reflecting investor concerns over high borrowing and debt levels.
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‘Is the Bank worried about recession risk?’
On AI, the Bank said that 30% of the US S&P 500’s valuation was made up by the five largest companies, the greatest concentration in 50 years.
Share valuations based on past earnings were the most stretched since the dotcom bubble 25 years ago, though looked less so based on investors’ expectations for future profits.
A recent report from the Massachusetts Institute of Technology found that 95% of businesses that had integrated AI into their operations had yet to see any return on their investment.
“This, when combined with increasing concentration within market indices, leaves markets particularly exposed should expectations around the impact of AI become less optimistic,” the statement said.
An extraordinary milestone was achieved overnight for the price of gold.
The spot gold price topped $4,000 an ounce for the first time on record – and futures data suggests no let up in its upwards momentum for the rest of 2025.
It was trading at $4,035 early on Wednesday morning.
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It has risen steadily since Trump 2.0 began in January, when it stood at a level around $2,600.
Sky News was quick to report on the early reasons for a spike in the price when heavy outflows were witnessed at the Bank of England.
Gold has traditionally been seen as a safe haven for investors’ money in tough times.
There has been plenty to worry about this year – not all of it down to Donald Trump.
Analysts say the surge during 2025 can be partly explained as a hedge against the US trade war and the resulting slowdown in the global economy, which has hit demand for many traditional growth-linked stocks and the dollar.
Wider economic and geopolitical uncertainty, such as the tensions in the Middle East and concerns about the sustainability of US government debt levels, have also been at play.
Over this week, the political crisis in France and the implications of the continuing US government shutdown have been driving forces.
But there is one other, crucial, factor that has entered the equation, particularly since the end of the summer.
Many analysts say that gold has become a collective hedge against the possible implosion of the AI-driven boom for technology stocks in the US.
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Nvidia CEO backs UK in AI race
Despite a few wobbles, there have been almost endless headlines around record values for such shares, with most investment seen as a big bet on the future rather than current earnings.
Around 35% of the market capitalisation of the S&P 500 Index trades at more than 10 times sales, according to investment firm GQG.
AI leaders such as Nvidia and companies investing big in their capabilities see huge rewards ahead in terms of both productivity and profits.
But a recent report from the Massachusetts Institute of Technology found that 95% of businesses that had integrated AI into their operations had yet to see any return on their investment.
Ahmad Assiri, research strategist at the spread betting provider Pepperstone, said gold’s $4,000 level would test appetite but the outlook remained positive for now, given all the global risks still at play.
“Selling gold at this stage has become a high-risk endeavour for one simple reason, conviction.
“Institutions, central banks and retail investors alike now treat dips as a buying opportunity rather than a sign of exhaustion. One only needs to recall the $3,000 level just six months ago, reached amid the tariff headlines, to understand how sentiment has shifted.
“This collective behaviour has created a self-reinforcing cycle where every pause in momentum is met with renewed buying.
“Gold has evolved from a traditional hedge during uncertainty into what could be described as a conviction trade, an asset whose value transcends price, reflecting deeper doubts about policy credibility and the erratic course of fiscal decision-making.”
It all suggests there is good reason for momentum behind this gold rush and that more stock market investors could soon be running for them there hills.
Britain’s wealth gap is growing and it’s now practically impossible for a typical worker to save enough to become rich, according to a report.
Analysis by The Resolution Foundation, a left-leaning think tank, found it would take average earners 52 years to accrue savings that would take them from the middle to the top of wealth distribution.
The total needed would be around £1.3m, and assumes they save almost all of their income.
Wealth gaps are “entrenched”, it said, meaning who your parents are – and what assets they may have – is becoming more important to your living standards than how hard you work.
While the UK’s wealth has “expanded dramatically over recent decades”, it’s been mainly fuelled by periods of low interest rates and increases in asset worth – not wage growth or buying new property.
Citing figures from the Office for National Statistics (ONS) Wealth And Assets Survey, the think tank found household wealth reached £17trn in 2020-22, with £5.5trn (32%) held in property and £8.2trn (48%) in pensions.
The report said: “As a result, Britain’s wealth reached a new peak of nearly 7.5 times GDP by 2020-22, up from around three times GDP in the mid-1980s.
“Yet, despite this remarkable increase in the overall stock of wealth, relative wealth inequality – measured by the share of wealth held by the richest households – has remained broadly stable since the 1980s, with the richest tenth of households consistently owning around half of all wealth.”
According to the think tank, this trend has worsened intergenerational inequality.
It said the wealth gap between people in their early 30s and people in their early 60s has more than doubled between 2006-08 and 2020-22 – from £135,000 to £310,000, in real cash terms.
Regional inequality remains an issue, with median average wealth per adult higher in London and the South East.
Could wealth tax be the answer?
The report comes seven weeks before Rachel Reeves delivers her budget on 26 November, having batted away calls earlier this year for a wealth tax.
Former Labour leader Lord Kinnock is among those to have called for one, in an interview with Sky News.
Read more from Sky News:
What is a wealth tax?
What wealth tax options could Britain have?
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Options for wealth tax
But speaking to Bloomberg last month, Ms Reeves said: “We already have taxes on wealthy people – I don’t think we need a standalone wealth tax.”
Previous government policies targeting Britain’s richest, notably a move to grab billions from non-doms, has led to concerns about an exodus of wealth. The prime minister has denied too many are leaving the capital.
Molly Broome, senior economist at the Resolution Foundation, said any wealth taxes would not just be paid by the country’s richest citizens.
She said: “With property and pensions now representing 80% of the growing bulk of household wealth, we need to be honest that higher wealth taxes are likely to fall on pensioners, southern homeowners or their families, rather than just being paid by the super-rich.”
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