Recently named Chancellor of the Exchequer, Jeremy Hunt, has announced that the government’s energy price cap will be subject to review from April 2023.
Liz Truss and Hunt have agreed that it would “not be responsible to continue exposing public finances to unlimited volatility in international gas prices”, the latter explained in his statement today.
There will be a Treasury-led review into how the government should support the public with their energy bill after the cap is scrapped in April.
Originally the price cap on domestic energy was due to remain for two years. This recent announcement guarantees it will be in place for just five months.
Hunt said: “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.”
The chancellor claims that the new approach will “better incentivise energy efficiency”.
Addressing how businesses will be affected by this, Mr Hunt explained that support will be provided to those “most affected”, however, there were no details provided on what this support will be.
The main point that the new chancellor came back to throughout his statement was stability, as he reversed almost all of his predecessor’s tax cuts announced in the government’s mini-budget three weeks ago.
Hunt said that stability was the “most important objective for our country right now”, further adding that “governments cannot eliminate volatility in markets but they can play their part”.
Tessa Khan, director of Uplift, which is part of the Warm this Winter coalition has demanded the government acts to lower energy bills now and in the future.
Khan said: “The government must not waver on its commitment to support those who without financial support will be forced into impossible choices this winter, such as between heating and eating.
“Seven million households will still be in fuel poverty even with the current level of support and must be properly protected.
“But there is now, finally, recognition that Liz Truss’ original energy plan is wrongheaded and urgently needs rewriting.
“It must now include measures to cut energy waste, through for example a national insulation programme, which could save households and the Treasury billions.
“It must go full throttle into renewables, which are now many times cheaper than UK gas, rather than blocking them for ideological reasons.
“And the UK must finally stand up to the oil and gas companies raking in obscene profits, which means an end to the vast subsidies – hundreds of millions of tax rebates – to open new fields, which will do nothing to lower bills and little to nothing for UK energy security, and a proper windfall tax, one that is backdated and without gaping loopholes.”