Jeremy Hunt extends energy price guarantee for further three months to ease cost of living

The energy price guarantee will remain capped at £2,500 until June
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The energy bill support scheme will be extended for a further three months, Jeremy Hunt has announced.

The energy price guarantee, which caps average household bills at £2,500, will be extended at its current level from April to June.

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It had been due to rise to £3,000 from next month, but it will now stay frozen at its current level in a move to help ease the cost of living as the Chancellor sets out a “Budget for growth”.

The three-month extension of the energy price guarantee at its current £2,500 level will save a typical household around £160, the government said. The cost of scrapping the planned 20% increase will amount to around £3 billion.

The energy price guarantee will remain capped until June (Composite: Mark Hall)The energy price guarantee will remain capped until June (Composite: Mark Hall)
The energy price guarantee will remain capped until June (Composite: Mark Hall)

Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so, to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer, when gas prices are expected to fall.

“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”

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Falling global energy prices mean that the current level will be extended to “bridge the gap” until costs are expected to fall below the cap. The Ofgem price cap between April and June is £3,280, but this will now be overridden by the government’s announcement.

Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”

The energy price guarantee first came into effect in October, replaced the £1,971 Ofgem price cap. The government guarantee reduces the amount households can be charged per unit of gas or electricity, to an annual equivalent of around £2,500 for a typical household in Great Britain. Energy bills will still be higher or lower depending on how much energy is used - for example energy bills will still be lower for in a well-insulated home that uses less energy.

Lower wholesale gas prices are expected to feed through to lower household energy bills from July, with data from consultancy firm Cornwall Insight suggesting the Ofgem Price Cap will reach an estimated £2,100 a year for a typical household.

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The Chancellor is set to use a “Budget for growth” to boost efforts to get people back to work with a major expansion of childcare support set to form a key part of Wednesday’s fiscal statement.

The current provision of up to 30 hours a week of funded childcare in England for parents of three and four-year-olds is expected to be extended to also cover one- and two-year-olds, while benefits reform and pensions allowances are also expected to form part of the Budget when Hunt addresses MPs on Wednesday afternoon.

Additionally, from April eight million low income and vulnerable households are set to receive at least £900 in cash payments from the government over the next year and and the National Living Wage is increasing to £10.42 an hour.

Hunt is expected to reference the “difficult decisions” taken last November to stabilise the markets, following the short-lived premiership of Liz Truss, as he pitches a plan the government hopes can deliver “sustainable” growth.

The Budget takes place against a backdrop of strikes involving teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists.

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