Millions facing 'cliff-edge' after Hunt cuts energy support short
Millions are facing ‘cliff-edge’ after energy support from Goverment is scaled back by new Chancellor
- Jeremy hunt drastically cut short the government’s energy bill cap to until April
- Analyst warned the move could see average bills double to more than £5,000
- Mr Hunt made the announcement amid reversal of £32billion worth of tax cuts
Millions of households face a ‘cliff-edge’ of soaring energy bills next year after Jeremy Hunt drastically cut short the Government’s support scheme from two years to six months.
The new Chancellor said yesterday the scheme, which aims to keep average annual household bills below £2,500 amid soaring energy prices, will be replaced in April.
Analysts warned the move could see average bills double to more than £5,000 for some households.
Mr Hunt made the announcement amid the reversal of £32billion worth of tax cuts to reassure the markets after the turmoil sparked by last month’s ‘mini-Budget’.
Millions of households face a ‘cliff-edge’ of soaring energy bills next year after Jeremy Hunt drastically cut short the Government’s support scheme from two years to six months
Speaking in the Commons, he also refused to rule out expanding windfall taxes on oil and gas giants’ profits to raise more money to plug the black hole in the public finances.
The move would be another humiliating U-turn for Prime Minister Liz Truss, who last month ruled out imposing more windfall taxes, saying it would hinder investment in the economy.
But Mr Hunt told MPs: ‘I’m not against the principle of taxing profits that are genuine windfalls. Nothing is off the table.’
Treasury officials were yesterday scrambling to devise a new price guarantee scheme, which is likely to be means-tested.
The current regime had been due to apply to all households well into 2024. But it will now end in April.
Ofgem, the regulator, has yet to set a cap for April amid uncertainty about what will happen to the wholesale cost of gas.
However analysists say bills could top £5,000. One consultancy, Auxilione, told the Times that its forecast shows average household bills could hit £5,078 in April.
The Resolution Foundation think-thank predicts the figure could be around £4,000. while banking group Investec put their forecast figure around £3,923.
Meanwhile, The Resolution Foundation estimated curtailed support could save up to £40billion next year (2023-24).
Industry estimates suggested the previous two-year scheme could cost anywhere between £70billion and £140billion, depending on the wholesale price of gas.
Mr Hunt pledged that ministers would continue to provide support for the most vulnerable in society. ‘The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need,’ he said.
The Chancellor added that support for businesses will also be more targeted.
Labour went on the attack after the announcement. Miss Truss has repeatedly criticised the party for proposing support for household bills lasting only six months as well as its calls to expand windfall taxes on energy profits.
Darren Jones, Labour chairman of the Commons business, energy and industrial strategy committee, said: ‘We’ve long called for the targeting of public funds to those who need it the most.
‘Any end to support for all bill payers should be tapered off, instead of facing a cliff-edge.’
Mike Foster, chief executive of the Energy and Utilities Alliance, said the move, ‘together with the announcement that promised tax cuts have also been withdrawn, will heap huge financial pressure on to those already struggling to pay their bills’.
National Energy Action said ‘huge uncertainty’ had been created for households and John Palmer, of elderly charity Independent Age, said: ‘Instead of ensuring stability, today only provided uncertainty.’
My bungalow bills trebled
Mary Wiedman, 85, is already paying £180 a month to heat her one-bedroom bungalow. And from April – when the Governments energy price guarantee is due to be curtailed – that cost could soar higher stil
Mary Wiedman, 85, is already paying £180 a month to heat her one-bedroom bungalow. And from April – when the Governments energy price guarantee is due to be curtailed – that cost could soar higher still.
The retired nurse, right, saw her bills treble compared with last year after her former supplier went bust and the energy price cap increased.
The, widow, who has four grandchildren, has now turned off the radiators in her bedroom in order to cut costs.
Mrs Wiedman, a Tory Party member who lives near Hemel Hempstead, Hertfordshire, said: ‘Some people, especially pensioners who cannot go out and earn more money, will be unable to cope. I don’t know how the Prime Minister thinks this is a sensible solution.’
Mrs Wiedman, (pictured when younger) a Tory Party member who lives near Hemel Hempstead, Hertfordshire, said: ‘Some people, especially pensioners who cannot go out and earn more money, will be unable to cope’
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