Household energy bills to rise by £500 after Government reduces support...

Local, national, international and oddball news stories

Household energy bills to rise by £500 after Government reduces support...

Postby dutchman » Fri Nov 18, 2022 1:57 am

Treasury claims the cut would save £14bn

Image

Households face paying an extra £500 for their energy next year after the Government cut the level of taxpayer support.

The Chancellor has changed the “energy price guarantee” meaning typical household bills are on course to be £3,000 per year from April.

That compares to typical annual bills of £2,500 under the current energy price guarantee which has been running from October to protect households from soaring wholesale energy costs.

It was due to stay at that level for two years, but Jeremy Hunt has cut the support in a move the Treasury claimed would save £14bn.

Vulnerable households will get extra support as the Chancellor tries to strike a balance between cutting the state’s liabilities and continuing to protect those who need it.

The state has stepped in following a surge in wholesale energy prices worsened by Russia’s war on Ukraine, which risked tipping millions into fuel poverty.

However, fuel poverty campaigners warned that the crisis facing struggling households “looks as if it will get even harder” now support has been reduced.

Speaking in parliament, Mr Hunt said: “One of the biggest worries for families is energy bills [...]

“From April, we will continue the Energy Price Guarantee for a further 12 months at a higher level of £3000 per year for the average household.

“With prices forecast to remain elevated through next year, this will still mean an average of £500 support for every household.”

Typical annual bills under the guarantee of £2,500 currently and £3,000 from April compare to pre-crisis levels of £1,277 in October 2021.

The energy price guarantee was originally put in place by Liz Truss in one of the first acts of her short-lived premiership, amid warnings that annual bills could climb above £5,000.

Jeremy Hunt has taken the axe to the level of support offered after taking charge of the nation’s finances amid the turmoil caused by Truss’s mini-Budget.

As well as revising the £2,500 level to £3,000 from April, the support will now last until April 2024, rather than October 2024 as previously planned.

The Treasury predicts the guarantee will cost taxpayers £37.4bn-£24.7bn in 2022-23 and £12.7bn the following years. That compares to previous expectations of £30bn between October and March.

Typical bills from April could be lower than £3,000 if wholesale prices fall, although current expectations do not suggest that.

The energy price guarantee applies to all households, and households on means-tested benefits will get extra cost of living payments next year worth £900.

Pensioner households will receive £300 while people on disability benefit will get payments worth £150.

However, National Energy Action, the fuel poverty charity, said the breathing space for struggling households would now be “shorter lived and less helpful”.

Adam Scorer, chief executive, said: “Sadly, this means there is now no end in sight to the energy crisis for struggling households. For most, it looks as if it will get even harder.

“Boosting welfare payments and the targeted support that has been announced for energy bills will help some of the poorest households and at-risk groups.

“That's important, but there are big gaps in these measures especially for low-income households not on means-tested benefits.”

Image
User avatar
dutchman
Site Admin
 
Posts: 50286
Joined: Fri Oct 23, 2009 1:24 am
Location: Spon End

Re: Household energy bills to rise by £500 after Government reduces support...

Postby dutchman » Thu Feb 02, 2023 5:37 am

What infuriates me is that the subsidy takes no account of what individual householders have to actually pay for energy.

For example someone with a prepayment meter or totally dependent on electricity in a poorly insulated flat pays much more than someone with gas in a well-insulated bungalow. :fuming:
User avatar
dutchman
Site Admin
 
Posts: 50286
Joined: Fri Oct 23, 2009 1:24 am
Location: Spon End

Re: Household energy bills to rise by £500 after Government reduces support...

Postby dutchman » Tue Feb 07, 2023 3:49 am

Energy prices to soar again as Jeremy Hunt rejects pleas to halt rise

Image

Chancellor Jeremy Hunt has rejected calls to prevent sharp rises in domestic energy bills for all households in his March budget – meaning millions of users will see costs soar by about 40% from April.

Instead, Hunt will emphasise the extra support he is giving to the poorest and most vulnerable households, including those on benefits, in what he will describe as a more fairly targeted system of support.

Demands for the Treasury to halt a planned rise in the energy price guarantee (EPG) – the discounted cost of gas and electricity to consumers – from £2,500 to £3,000 a year for the average household in the March budget have been growing in recent weeks, particularly as the wholesale cost of energy has been falling.

Because an additional £400 of extra government help with energy costs for all households, made in monthly payments since October, also ends in March, the effective rise for all but those on the lowest incomes will be about 40%.

Calls for Hunt to stop the rise in the EPG have been led by consumer champion Martin Lewis, founder of the website MoneySavingExpert.com, who has said the move would be an obvious “rabbit out of the hat” that the chancellor could afford to pull out of his red box in March.

The Labour party has also been calling for the rise in the EPG to be stopped, and for the extra costs to the government of doing so to be met through the proceeds of a more punitive windfall tax on the vast profits of energy companies.

But Treasury insiders have told the Observer that the move is not under consideration, partly because Treasury receipts from its own windfall tax on energy companies have been less than expected, and because of worries about exposing taxpayers to future market risk.

Ruling out the move, a Treasury source said: “While gas prices have fallen in recent months, they are still five times higher than the historical average, and can just as easily increase.

“If the gas price spikes, the government will need to borrow billions of pounds more. While the energy price guarantee will continue to insulate millions of households from even higher wholesale gas prices, we need to reduce the taxpayer exposure to market volatility. Insulating every household – and on an open-ended basis – could have major implications for the public finances.”

Analysts at Deutsche Bank say maintaining the £2,500 price cap from April would only cost the government an additional £4.5bn because gas prices are falling quickly and the subsidy is unlikely to be needed by energy firms from July onwards. Analysts also said that maintaining the household price cap at £2,500 would help lower inflation.

Image
User avatar
dutchman
Site Admin
 
Posts: 50286
Joined: Fri Oct 23, 2009 1:24 am
Location: Spon End

Re: Household energy bills to rise by £500 after Government reduces support...

Postby dutchman » Tue Feb 07, 2023 4:04 am

the effective rise for all but those on the lowest incomes will be about 40%

Not so! Many of those on low incomes do not qualify for means tested benefits so will be far worse off than those who do. :fuming:
User avatar
dutchman
Site Admin
 
Posts: 50286
Joined: Fri Oct 23, 2009 1:24 am
Location: Spon End


Return to News

Who is online

Users browsing this forum: No registered users and 6 guests

  • Ads