Energy bill lifeline for millions as Shapps tipped to scrap £3k rise

Government 'may cancel energy price guarantee rise' says Lewis

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Millions of families across the UK could soon be handed a major energy crisis lifeline as Grant Shapps has hinted that the upcoming increase to the Government’s Energy Price Guarantee will be scrapped. From April, the Government is set to increase the price cap on household energy bills by £500 to £3,000, in a move that would likely push more families into fuel poverty. Since October last year, the Government has subsidised the cost of gas and electricity, limiting the increase in energy bills to £2,500 a year, instead of the previous £3,549.

As households brace for a staggering 20 percent increase in energy bills, Mr Shapps, the Secretary of State for the Department of Energy Security and Net Zerom said that he was “sympathetic” to calls for more support for struggling families. 

This comes after energy regulator Ofgem reduced its price cap to £3,280 from April 1, meaning the Government will pay on average £280 a year for each typical household under the guarantee, if the cap increases.

Previously, Ofgem had set the price cap on April energy bills to £4,279, meaning that the Government will now be subsiding almost £1,000 less per households compared to previous estimates.

Meanwhile, experts at Cornwall Insight predicted that the Ofgem price cap, which limits the unit price energy suppliers can charge, will continue to reduce this year, with average bills of £2,153 a year from July and then reducing further to £2,161 from October this year. 

Mr Shapps told the Times: “I completely recognise the argument over keeping that price guarantee in place, and the chancellor and I are working very hard on it. I’m very sympathetic to making sure that we protect [people]. We’re looking at this very, very carefully.”

Reacting to this, Mike Foster, CEO of the Energy and Utilities Alliance, said: “The Government has a big choice to make in the coming budget. It could help households pay their energy bills or let millions more struggle to put food on the table and keep their homes warm. I hope it chooses the first option.

“From April, under current plans, the Energy Price Guarantee increases from £2,500 to £3,000, so the average household will be £500 a year worse off.

“But to make matters worse, last year the Government also offered households a £400 rebate, so after April unless it acts in the budget, the average household will actually be £900 a year worse off just because of higher energy costs.”

“This situation is untenable. The latest estimates on gas wholesale costs suggest that the Government can afford to keep bills pegged to £2,500 a year.

“Falling global prices means it has become more affordable to do so. The Government should take advantage of this good fortune and keep average bills frozen at £2,500.”

While the Government’s current subsidies have already helped households save almost £1,000 on their energy bills, new Government data paints a harrowing picture, as just under one in eight of all households in England were found to be fuel-poor in 2022.

A report released by the Department for Energy Security & Net Zero on Tuesday shows 3.26 million households in England were in fuel poverty in 2022 – 13.4 percent of the total.

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Julia Dwyer, Director of the Cadent Foundation, said: “The fuel poverty statistics released today unfortunately paints an incredibly challenging picture for many households across the UK.

“Through our Cadent Foundation, we are hearing more and more worrying stories from families that simply cannot cope with the uncertainty of rising bills.”

“While we have several schemes in place to support our most vulnerable customers, we need a combined approach across the entire utility sector that leads to a more sustainable solution.

“Improving energy efficiency of homes should be at the core of these plans to allow families to take more longer-term control of their bills and usage.”

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