UK household bills could climb as high as £4,347 a year by next April after the chancellor announced that the government would scale back support, an analyst has warned.
New Chancellor Jeremy Hunt said he and the prime minister had “reluctantly” agreed it would not be responsible to keep the energy price guarantee beyond April 2023.
Cornwall Insight estimates that electricity costs could rise next April to £2,060 and and gas could cost £2,286.70, adding up to £4,347.69.
However the analyst says that costs could reduce in Q3 and Q4 and combined gas and electricity costs could fall to £3,722.11 by the period of October to December. The forecast could change depending on movements in the wholesale price of energy. At present the energy price guarantee is capped at £2,500 for a typical household.
Chancellor Jeremy Hunt's statement in full
The chancellor said the government would set up a review to find a “new approach” that will “cost the taxpayer significantly less”.
Confirming a U-turn on the energy price guarantee, the new chancellor said on Monday: "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.
“Any support for businesses will be targeted to those most affected and the new approach will better incentivise energy efficiency.”
Money saving expert Martin Lewis has urged the government to come up with a support package which will continue to aid households with energy bills after April next year.
Money saving expert Martin Lewis discusses the financial measures announced by the chancellor
"The post-April support will still need [to] reach a decent way up the net and support middle earners, energy rates are still huge."Gareth Miller, CEO at Cornwall Insight said: “In very challenging political, market and economic circumstances, it is good to see the government recognise the volatility in prices the fiscal position may otherwise be exposed to if it did not take this course of action.
“Work on refined domestic support, alongside developing a prospectus for what replaces the Energy Bill Relief Scheme for business, will now need to begin and begin rapidly.
"It will be vital that a Treasury-led review avoids falling into a public finance-led approach that is too far removed from social and economic realities for households. Hearts as well heads will need to be engaged.”
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