Energy bills support to stay until summer
STRUGGLING households were thrown a lifeline by Jeremy Hunt yesterday as he extended energy bill support for three months.
The Treasury said the Energy Price Guarantee (EPG) will be kept at £2,500 from April to June – saving a typical household £160 on their gas and electricity bills.
The support will help bridge the gap to lower prices, predicted from the end of June.
The Chancellor also outlawed the premium that more than four million households with prepayment meters have to pay.
This brings their charges into line with comparable customers who pay by direct debit.
Drivers, meanwhile, have been given relief with fuel duty frozen.
Adam Scorer, chief executive at National Energy Action, said: “Sense prevailed in the Budget.
“The Energy Price Guarantee has been rightly extended at the current level.
“It means the average annual bill will be around £2,500. And prepayment customers will no longer be charged more to receive their energy than direct debit customers – something we’ve long campaigned for.
“[However] the Energy Bill Support Scheme has ended, meaning households will be £67 a month worse off. Bills from April will be higher than they have ever been during the crisis.
“There will be 7.5 million UK households in fuel poverty – up from 6.7 million. The cost of a warm and safe home is still out of reach for millions.”
Ofgem’s price cap – based on wholesale prices and other costs – is set to fall below £2,500 from June, unless wholesale prices rebound significantly.
Consultants at Cornwall Insight said the cap is likely to drop below £2,100 in the second half of this year and £2,013 in the third quarter. Investec forecast £2,056, with similar prices in the last three months of the year.
Dr Craig Lowrey of Cornwall
Insight said: “The announcement that the Government will maintain the EPG at £2,500 has provided much-needed clarity for energy suppliers and no doubt relief for households who rely on the scheme to safeguard their finances from the volatile energy market.
“While the Government’s decision will come at an estimated additional cost of £2.6billion for the three months to July, default tariff cap (price cap) predictions indicate that the EPG costs will be short-lived – as average bills are expected to drop well below £2,500 in the latter half of the year.
“It’s a small price to pay to protect already hard-hit households.”
The announcement by regulator Ofgem that energy giants will be banned from installing prepayment meters by force past the end of March, was followed by Mr Hunt’s news that those with the pay-asyou-go meters will no longer pay a premium price.
Caroline Abrahams, charity director at Age UK, said: “We are pleased the cost of energy via a pre-payment meter is coming into line with what everyone else pays.
“About time too, as it’s outrageous some of the poorest people have been charged more. This will benefit around 600,000 older households. We hope it is just the first step in fundamental reform of the pre-payment regime.”
The Chancellor also pleased drivers by confirming fuel duty will be frozen – saving £100 next year.
The planned increase of 11p in fuel duty was cancelled and rates will be kept the same for the next 12 months.
Nicholas Lyes, RAC head of roads policy, said: “We welcome the Government’s decision to keep the 5p fuel duty cut in place for another 12 months.
“The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut. Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”
Britons’ pockets have been hit hard by a cost-of-living crisis on
the back of the pandemic. The wholesale price of oil rocketed due to the war in Ukraine leading to a surge in fuel and energy prices.
Pump costs are currently stable and significantly down on the July’s records – now averaging 147.28p a litre for petrol and 166.05p for diesel. But prices remain much worse than before Covid and the start of war in Ukraine last February.
Silviya Barrett, from pressure group Campaign for Better Transport, said: “We are disappointed the Chancellor has chosen to maintain the 5p fuel duty cut for another 12 months and continue the fuel duty freeze for a 13th year.
This will disproportionately benefit those who are already better off.
“If the Government really wanted to help those who are struggling the most with the cost-of-living crisis – and support green growth – it should be helping to reduce the cost of public transport.”