£900 budget hike to your energy bill
By and
MILLIONS of households face a £900 average rise in their energy bills next year under plans to be unveiled in this week’s Budget.
Whitehall sources told the Daily Mail that Chancellor Jeremy Hunt is poised to slash Government subsidies and allow average annual bills to reach £3,000 from April.
The new level is £500 above the current £2,500 energy price ‘guarantee’ set out by Liz Truss, which was originally supposed to last for two years, and almost treble the £ 1,042 average in April 2020.
Sources told the Mail that a £400 one-off payment reducing bills for all households this winter will not be repeated, leaving millions facing an average rise of £900 in total – an extra £75 per month.
Mr Hunt, who dubbed himself ‘Scrooge’ yesterday, said universal support would continue to help families next year but added: ‘There has to be some constraint.’
One source acknowledged families would face a painful rise in energy costs next April but said that continuing government support would stop bills reaching their forecast level of around £4,000 next year.
‘It is going to be tough, but it will be £1,000 less than if we did nothing,’ they said.
Mr Hunt indicated yesterday that additional support is likely to be targeted at the ‘most vulnerable’, including pensioners and those on benefits.
The reduction in energy support comes as ministers scramble to close a £54billion ‘hole’ in the public finances.
The Chancellor said we were ‘all going to be paying a bit more tax’ and warned ‘sacrifices’ would be needed to restore order to the Government’s books.
He said Thursday’s Budget would see him act as ‘Scrooge’ but that action to restore the public finances was needed now to protect the economy for future Christmases. He added: ‘I hope people understand that there’s going to be some horrible decisions in order to get us back into the place where we are the fantastic country we all want to be.’
Mr Hunt said the UK’s energy costs were set to soar from £40billion in 2019 to an astonishing £190billion this year as a result of the war in Ukraine. He said the cost rise was the equivalent of the NHS budget – and warned it was not ‘sustainable’ for the taxpayer to cover the entire cost.
‘We have to be honest with people – it’s not possible to subsidise people’s energy bills indefinitely,’ he added. ‘In the end, if we want to be a low-tax economy we’ve got to find a way of not ending up with an entire second NHS in terms of the cost.’
The energy price guarantee was unveiled by Miss Truss in September in response to soaring energy costs. The two-year plan was meant to cap energy prices at a level that would result in average bills of £2,500.
But, with costs estimated at £ 10billion a month, Mr Hunt moved quickly to cut the duration of the scheme to just six months when he succeeded Kwasi Kwarteng at the Treasury last month.
He and Rishi Sunak considered scrapping the universal subsidy altogether. But with unconstrained average bills forecast to
hit £4,000 next April, they concluded that too many families on middle and low incomes would face extreme poverty without further support.
Mr Hunt said universal energy support would also help keep inflation lower than it would otherwise be.
Speaking during a round of media interviews yesterday, he said: ‘We don’t want anyone not to be able to afford to heat their home over this winter or indeed future winters.
‘But in the long run, what you need is a plan that means we don’t need to have to give very, very expensive support as taxpayers.’
The Chancellor also said the Government would come forward with a ‘proper’ energy plan.
‘There has to be some constraint’