Chancellor confirms energy price guarantee to end in April

Previously, the package which provides a £400 non-repayable discount to each home was set to take place over two years.  

Chancellor Jeremy Hunt confirmed today that the energy price guarantee will now be in effect until April, after it was previously set to last over a two-year period.

According to the Government, the energy price guarantee will cost the Government £31 billion from October to April. For the full year, the Institute for Fiscal Studies predicted the package would cost £100 billion.

Hunt said that it “would not be responsible” to continue exposing public finances to volatile international gas prices.

“I’m announcing today a Treasury-led review into how we support energy bills beyond April next year,” said Hunt.

The energy support package is a Government scheme designed to support UK households with the rising cost of energy. According to the House of Commons, the price of energy was due to increase by 80% in the year to October, which equates to an average rise of almost £1,600.

This is a result of rising demand as the economy recovers from the pandemic and limited supply due to the war in Ukraine.

However, the Government said that under this guarantee the typical spend of £2,500 will now be 27% above the summer 2022 cap.

Included in this package is a £400 non-repayable discount to all eligible homes, which will be provided in instalments.

In addition, more vulnerable households were due to gain extra support. For example, over eight million pensioner households would receive a one-off payment of £300.

Hunt also reversed other changes made in former Chancellor Kwasi Kwarteng’s mini-Budget speech last month.

These included a U-turn on the plan to cut income tax by 1p, holding it at 20% indefinitely. The 1p cut was set to add an extra £170 into the average worker’s pocket, according to calculations from HM Treasury after the mini-Budget.

Meanwhile, the price of alcohol is set to increase as Hunt removed the tax freeze which was due to take effect from February.

However, the cuts to National Insurance and Stamp Duty are to remain in place.

The abolition of the Health and Social Care Levy, together with the scrapped rise in National Insurance contributions, is set to save businesses on average £9,600 a year. For the average worker this will equate to £330.

The raised Stamp Duty threshold, which has been in effect since 23 September, meant that 200,000 more buyers would not be eligible for this tax at all, according to the Treasury.