Energy bills will NOT go up next month as Chancellor Jeremy Hunt set to extend the government’s price cap
- Whitehall source said ministers are not planning to raise energy bills in April
- The chancellor plans to extend the price cap guarantee for three more months
Energy bills will not go up next month – with the Chancellor set to extend the Government’s energy price guarantee.
Households would have seen the cap on bills rise from £2,500 to £3,000 a year from April.
But Jeremy Hunt is planning to keep the guarantee for three more months until wholesale prices have fallen so far that it becomes unnecessary.
A Whitehall source 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 firms were preparing April’s bills on the basis that government support would be maintained close to the current level.
Chancellor Jeremy Hunt is planning to keep the government’s energy price guarantee
The Resolution Foundation think-tank and consumer champion Martin Lewis both said Mr Hunt was likely to prevent bills increasing, with the latter telling the BBC it was almost certain.
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Mr Lewis, the founder of Money Saving Expert, said: ‘We are not at the smoking gun stage that this is definitely happening, but I would say that we’re at an 85 per cent likelihood that the price won’t be going up.’
And energy firms have missed a deadline to tell prepayment meter providers that there will be a new rate in April, suggesting there will not be a change, Mr Lewis added.
The increase in the energy price cap was set to coincide with the end of the energy bill support scheme which paid each household £400.
Dame Clare Moriarty, of Citizens Advice, warned this week that millions of middle-class families would face a ‘catastrophic’ hit to their finances if the support is scaled back. If the cap increased by £500, the number of people unable to pay their energy bills would have doubled.
Mr Hunt faced calls to use an £11 billion budget windfall to scrap the £500 rise. The unexpected savings on energy prices came from 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 cushion people over 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 cautioned yesterday that no decision has been made and reports the cap will remain are ‘speculation’.
The Government asked energy companies to prepare for a decision either way, the source added.
If the cap increased £500, the number of people unable to pay their bills would have doubled
The energy price cap is currently £4,279 a year, meaning households would pay this amount without the Government’s support.
Regulator Ofgem said this week that will fall to £3,280 from April.
And the Government is confident this will fall to below £2,500 from July, meaning the support would no longer be necessary.
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