Budget 2023

Energy bills support extended for three months

Jeremy Hunt preparing for today’s Budget

Millions of households will get more support with high energy bills to help ease the cost of living, the Chancellor has announced today ahead of the Spring Budget. 

The Energy Price Guarantee, which caps typical energy bills at £2,500, will be maintained at the same level for a further three months over April, May, and June, worth £160 in total for a typical household.

Opponents have called for a cut in the cap and say consumers will suffer from the withdrawal of the £400 Energy Bill Support Scheme payments.

The Chancellor is announcing the extension today as part of his Spring Budget, which focuses on easing the impact of rising prices, delivering on his promise to halve inflation, and grow the economy by supporting more people into work. 

Government support has cut the typical family energy bill by over £1,300 since October, stopping the average household energy bill hitting £4,279 a year this winter. 

The Chancellor’s three-month extension of the Energy Price Guarantee at £2,500 means households won’t feel the full force of Ofgem’s Price Cap between April and June – which stands at £3,280 – helping to bridge consumers into the summer. 

Lower wholesale gas prices are expected to feed through to lower household energy bills from July, where Cornwall Insight data suggests the Ofgem Price Cap will reach an estimated £2,100 a year for a typical household. 

From April, more support is coming online with 8 million low income and vulnerable households set to receive at least £900 in cash payments over the next year, benefits and pensions set to rise by over 10 per cent, and the National Living Wage increasing to a record £10.42 an hour, so that it always pays to work. 

Follow today’s Budget live with Daily Business from 12.30pm

The Spring Budget will go further, providing hundreds of pounds more in help with childcare costs for parents on Universal Credit and ending the energy premium paid by households who use pre-payment meters, which will save 4 million families £45 a year from July. 

Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the Energy Price Guarantee at its current level until the summer when gas prices are expected to fall.

“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”

Gas bill
Bills will be reduced

Chancellor Jeremy Hunt said:  “High energy bills are one of the biggest worries for families, which is why we’re maintaining the Energy Price Guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”

Energy Secretary, Grant Shapps said: “Putin’s illegal war has cost British families, which is why we’ve stepped in to pay around half of the typical household energy bill.

“With wholesale prices falling families will start to benefit, but in the meantime we’re stepping back in with the Energy Price Guarantee to prevent the typical electricity and gas bill exceeding £2,500. It’s just part of our plan to help families this winter.”

SNP Economy spokesperson Stewart Hosie said: “It’s truly pathetic that the Chancellor has failed to cut energy bills, despite having ample resources to do so. The Tories are ripping families off by keeping bills at such exorbitantly sky-high levels, with many families forced to pay three times what they paid a year ago.

“The Tories could have saved households £1,400 by backing the SNP’s calls to cut energy bills by 20% and maintain support payments for all those that currently receive them.” 

In the Autumn Statement the Chancellor announced that the EPG was due to rise to £3,000 on 1 April, with the government then expecting to borrow £12 billion to fund this support. Since then, energy prices have fallen by 50%, cutting the borrowing needed to fund energy support by two- thirds to £4 billion.

The change announced today also follows the latest Ofgem Price cap of £3,280 from April to June which, in large part, sets the cost for this three-month extension. Households would pay the full Ofgem price cap rate if there was no Energy Price Guarantee.

Holding down energy bills is also part of the government’s plan to halve inflation this year, and in November the Office for Budget Responsibility said that the EPG would lower the peak rate of inflation.

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