Budget: Chancellor to end extra energy costs paid by prepayment meter customers

ITV News correspondent David Wood looks ahead at what is expected from Jeremy Hunt's Budget this week, as it is announced extra prepayment meter costs will end

Prepayment meter customers will no longer be charged more for energy, under reforms to be announced in the Chancellor’s Budget.

Jeremy Hunt has announced the government is set to end the “prepayment premium” from July, saving more than four million households £45 a year on their energy bills, according to the Treasury.

Households on the pay-as-you-go meters, who are typically low income, currently pay more on average than direct debit customers because of firms managing the meters passing on costs to users.

Mr Hunt said: “It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that.

“From July four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.”

The Treasury estimates the change will cost the taxpayer £200 million.

Prepayment meters have been in the spotlight after some energy suppliers were caught breaking into the homes of people struggling to pay their bills to forcibly install them.

It comes after an investigation by The Times revealed how vulnerable customers – including disabled and mentally ill people – were being forced by British Gas onto the pay-as-you-go meters.

Firms were subsequently banned from installing prepayment energy meters under warrant, but that moratorium is due to expire at the end of March.

Energy Secretary Grant Shapps said: “While actions I’ve pushed for have meant forced installations are on pause, warrants aren’t being waved through and Ofgem is toughening up its reviews, our changes will make sure families aren’t penalised simply for how they heat their home.”

Meanwhile, the Chancellor is expected to cancel a planned £500 hike in average energy bills which was due to come into force next month.

For the average household that means bills could stay at around £2,500, instead of going up to £3,000 as was previously announced.

Chancellor Jeremy Hunt. Credit: Stefan Rousseau/PA

Mr Hunt has come under increasing pressure in recent weeks to cancel the rise, which was set to come into force from April 1 as the country grapples with the cost of living crisis.

Ed Miliband MP, Labour's shadow climate and Net Zero Secretary, said: “Labour led the way in calling for an end to the unfair prepayment meter penalty. The government has finally listened.

"Their delay will be cold comfort for the millions of prepayment customers who have been paying higher energy bills  as a result of the government’s indecisiveness. The government must urgently confirm that the ban on forced installations will remain in place beyond the end of March.

“Britain’s energy bills are too high and our energy system is too weak after thirteen years of Conservative failure. "Only Labour can cut bills once and for all,  by making Britain a clean energy superpower by 2030 and with GB Energy, a publicly owned energy company producing cheaper, cleaner, homegrown power for the British people.”

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