Millions of households across the UK could soon be handed a major energy bills lifeline. This is because the Treasury is considering plans to scrap the upcoming increase to the Government’s Energy Price Guarantee. Chancellor Jeremy Hunt is reportedly looking at plans to support families further by preventing the upcoming £500 increase in energy bills, which would likely push more families into fuel poverty.
Since October last year, the Government has subsidised the cost of gas and electricity, limiting the increase in energy bills to £2,500 a year, instead of the previous £3,549.
As households brace for a staggering 20 percent increase in energy bills within weeks, the Treasury has so far resisted pressure to keep the Energy Price Guarantee at £2,500.
But on Tuesday government officials confirmed that plans to lift the price cap from April were currently “under review” and could be dropped in the Spring Budget in two weeks’ time.
The Financial Times reported one official as saying: “At present there is no plan to change the policy in the Budget but there could be.”
A Downing Street spokesperson confirmed to them that the policy was being re-examined: “All I would say on this is it’s something we are just keeping under review.”
This comes after energy regulator Ofgem reduced its price cap to £3,280 from April 1, meaning the Government will pay on average £280 a year for each typical household under the guarantee if the cap increases.
Previously, Ofgem had set the price cap on April energy bills to £4,279, meaning that the Government will now be subsiding almost £1,000 less per household compared to previous estimates.
Meanwhile, experts at Cornwall Insight predicted that the Ofgem price cap, which limits the unit price energy suppliers can charge, will continue to reduce this year, with average bills of £2,153 a year from July and then increasing slightly to £2,161 from October this year.
Grant Shapps, the Secretary of State for the Department of Energy Security and Net Zero also said that he was “sympathetic” to calls for more support for struggling families.
READ MORE: Shapps orders energy firms to hand Britons bills lifeline
He told the Times: “I completely recognise the argument over keeping that price guarantee in place, and the Chancellor and I are working very hard on it. I’m very sympathetic to making sure that we protect [people]. We’re looking at this very, very carefully.”
Reacting to this, Mike Foster, CEO of the Energy and Utilities Alliance, said: “The Government has a big choice to make in the coming budget. It could help households pay their energy bills or let millions more struggle to put food on the table and keep their homes warm. I hope it chooses the first option.
“From April, under current plans, the Energy Price Guarantee increases from £2,500 to £3,000, so the average household will be £500 a year worse off.
“But to make matters worse, last year the Government also offered households a £400 rebate, so after April unless it acts in the budget, the average household will actually be £900 a year worse off just because of higher energy costs.”
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“This situation is untenable. The latest estimates on gas wholesale costs suggest that the Government can afford to keep bills pegged to £2,500 a year.
“Falling global prices means it has become more affordable to do so. The Government should take advantage of this good fortune and keep average bills frozen at £2,500.”
While the Government’s current subsidies have already helped households save almost £1,000 on their energy bills, new Government data paints a harrowing picture, as just under one in eight of all households in England were found to be fuel-poor in 2022.
A report released by the Department for Energy Security & Net Zero on Tuesday shows 3.26 million households in England were in fuel poverty in 2022 – 13.4 percent of the total.
