Autumn Budget 2026: IET welcomes growth measures but says delivery depends on skills, infrastructure and resilience

As Chancellor of the Exchequer John Healey delivers the Autumn Budget, experts from the Institution of Engineering and Technology (IET) respond to measures affecting growth, infrastructure, skills, energy and emerging technologies.

• The Data Centres Covenant addresses key challenges for growth such as energy supply and local benefits, but questions remain around sustainability 
• As the budget brings further investment in AI across sectors, we need to ensure the infrastructure is in place to maximise the value from it. 
• The UK's ambitions for growth, infrastructure and emerging technologies must be matched by investment in skills 
• Reforms to energy pricing and market structures are welcome, but long-term success depends on maintaining investment in infrastructure, resilience and the transition to net zero 

The Data Centre Covenant – how sustainable is it? 

Jayne Black, Digital Futures Policy Manager at the IET, said: 

“Although speed is critical to underpin the pace of innovation, so too is long term resilience and a stable infrastructure. The new Data Centre Covenant is an important acknowledgement that data centers cannot be planned separately from the energy system or the communities in which they are built, with steps towards making data centres more sustainable, such as re-using waste heat. We welcome the expectation that strategic projects seeking enhanced support should pay their fair share of energy costs, meet high environmental standards and invest in local jobs and apprenticeships. 

The IET has proposed a bronze, silver and gold sustainability rating for new UK data centres, which could help make standards clearer and encourage improvements across the sector. This would emphasise the moral responsibility surrounding data centre energy consumption. Government should subsequently encourage the removal of "bronze" data centres (those not using green energy) in the UK. Similar to the country’s shift away from coal energy, this could support the push for sustainable technological progress.    
  
However, we must be cautious not to overpromise. Data centres can place substantial demands on the grid, and proposals to accelerate connections or permit temporary on-site power must be carefully assessed against long-term resilience and sustainability. Temporary generation should not become a substitute for a durable network solution. The rising demand for data centres adds to the system-wide challenge of decarbonising the electricity grid. Data centres can also stress grid stability due to varying levels of ongoing compute demand.  
  
Finally, data centres provide essential enabling infrastructure for technologies such as AI, but the number of permanent jobs at an individual site may be relatively modest. The wider economic value lies in whether reliable computing capacity attracts other businesses, supports UK suppliers and creates skills and employment opportunities beyond the site itself.” 

Skills development must keep pace with the UK's ambitions for growth, infrastructure and emerging technologies

Dr Graham Herries, Chair of the IET’s Policy Oversight Committee, said: 

"The IET welcomes the government's continued focus on apprenticeships, workforce development and creating opportunities for young people to enter employment. 

The UK's ambitions for economic growth, clean energy, digital technologies, advanced manufacturing and critical infrastructure all depend on people with the skills to deliver them. Measures that support apprenticeships, help employers invest in training, and create clearer routes into technical careers are therefore an important step in strengthening the UK's future workforce. 

Apprenticeships remain one of the most important pathways into engineering and technology careers, helping develop the practical skills needed across a wide range of sectors. Support for SMEs, local apprenticeship services and initiatives that connect young people with technical careers can play a valuable role in widening participation and strengthening the talent pipeline across the country. 

However, the scale of the challenge should not be underestimated. Engineering, energy, infrastructure, digital and emerging technology sectors are increasingly drawing from the same pool of technical talent. At the same time, rapid technological change is creating growing demand for higher-level engineering and technical skills. 

Expanding opportunities is important, but long-term success will depend on sustained workforce planning, stable technical education pathways, and continued investment in skills throughout people's careers. Alongside attracting new entrants into the profession, there must also be opportunities for existing workers to upskill and reskill as technologies and industries evolve. 

The key test of today's announcements will be whether they help build the engineering and technical capability needed to support the UK's wider ambitions. From AI and cyber security to energy and major infrastructure projects, delivering national priorities will ultimately depend on ensuring skills development keeps pace with ambition”.

Structural energy market reform is key to a secure and affordable transition 

James Bamborough Sustainability and Net Zero Policy Manager at the IET said  

"Today's Budget reflects a growing recognition that the UK's energy market needs structural reform alongside support for consumers. 

The removal of gas standing charges is likely to benefit many lower use households and could help improve the economics of electrifying heating. However, it is important to recognise that many of the costs associated with operating and maintaining the energy system do not disappear. In several cases, the proposals change how those costs are recovered rather than reducing them altogether. 

The most significant aspect of today's package is the focus on market reform. Efforts to ensure consumers benefit more directly from increasing volumes of lower carbon generation are welcome, but reforms must also preserve the investment needed in networks, generation, flexibility and system resilience and Government must communicate these costs. 

It is equally important that discussions about affordability consider businesses and industry as well as households. The British Industrial Competitive Scheme is a welcome recognition of this fact. A competitive and reliable energy system is essential for economic growth, electrification and the wider transition to net zero. 

Proposals to move some policy costs away from energy bills could help make electrification more attractive and support progress towards net zero. However, the success of these reforms should ultimately be judged on whether they deliver a long term secure, resilient and low carbon energy system." 

ENDS

Notes to Editors

About the IET

• We inspire, inform and influence the global engineering community to engineer a better world.
• We are a diverse home for engineering and technology intelligence throughout the world. This breadth and depth mean we are uniquely placed to help the sector progress society.    
• We want to build the profile of engineering and technology to change outdated perceptions and tackle the skills gap. This includes encouraging more women to become engineers and growing the number of engineering apprentices.   
• Interview opportunities are available with our spokespeople from a range of engineering and technology disciplines including cyber-security, energy, engineering skills, innovation, manufacturing, technology, transport and diversity in engineering.   
• For more information, visit www.theiet.org.
• Follow the IET on LinkedIn, Facebook and Instagram via @TheIET / @InstitutionofEngineeringandTechnology.

For media enquiries:

Sarah Jenkins 
SarahJenkins@theiet.org