Energy bills will NOT rise next month as Chancellor Jeremy Hunt plans to extend government price cap
- A source in Whitehall said ministers do not plan to raise energy bills in April
- The chancellor plans to extend the price cap guarantee for another three months
Energy bills are not going up next month – with the chancellor planning to extend the government’s energy price guarantee.
Households would have seen the limit on bills rise from £2,500 to £3,000 a year from April.
But Jeremy Hunt plans to hold on to the warranty for another three months until wholesale prices drop to the point where it becomes obsolete.
A source in Whitehall said ministers are expected to keep the guarantee at £2,500 and have asked energy suppliers to prepare for a decision.
It followed the revelation that energy companies prepared April bills on the basis that government support would be kept close to current levels.
Chancellor Jeremy Hunt plans to keep the government’s energy price guarantee
The Resolution Foundation think tank and consumer advocate Martin Lewis both said Mr Hunt was likely to prevent bills from rising, with the latter telling the BBC it was almost certain.
Mr Lewis, the founder of Money Saving Expert, said: ‘We are not yet at the smoking gun stage that this is definitely happening, but I would say we have an 85 per cent chance of the price not going up. .’
And energy companies have missed a deadline to tell prepayment meter providers that there will be a new tariff in April, suggesting there will be no change, Mr Lewis added.
The increase in the energy price cap would coincide with the end of the energy bill support scheme, which would pay each household £400.
Dame Clare Moriarty, of Citizens Advice, warned this week that millions of middle-class families would face a ‘catastrophic’ blow to their finances if aid is scaled back. If the limit were increased by £500, the number of people unable to pay their energy bills would have doubled.
Mr Hunt faced calls to use an £11bn windfall to scrap the £500 rise. The unexpected savings in energy prices were due to warmer European weather and a slowdown in China.
Extending the price guarantee until June 30 would cost the government nearly £2.7 billion.
And Paul Johnson, of the IFS think tank, said: “The chancellor could very easily… extend the energy price guarantee for another three months to relieve people of the burden for the first part of the next fiscal year.”
Energy Secretary Grant Shapps said the Chancellor was “very sympathetic” to calls to protect households from the increase.
But a source close to Mr Hunt warned yesterday that no decision has been made yet, reporting that the cap remains “speculation”.
The government asked energy companies to prepare a decision anyway, the source added.
If the limit were raised by £500, the number of people unable to pay their bills would have doubled
The energy price cap is currently £4,279 a year, meaning that households would pay this amount without government support.
Regulator Ofgem said this week that will fall to £3,280 from April.
And the government is confident this will fall to less than £2,500 from July, meaning the aid is no longer needed.