Autumn Statement: Jeremy Hunt outlines further energy support
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Chancellor Jeremy Hunt has confirmed the energy price guarantee extended will be extended in April for 12 months meaning the typical household will pay £3,000 – although they could end up paying more if they are high users. The Chancellor anounced the news in his Autumn Statement earlier today which will come as welcome news to cash-strapped households struggling to pay energy bills.
According to Ofgem, a typical home uses the equivalent of 12,000kWh of gas and 2,900kWh of electricity each year.
However, households who use more energy than this will pay more than the cap as the energy price guarantees caps the amount that can be charged per unit and standing charge.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition said Jeremy Hunt’s statement will lead to more fuel poverty.
Sarah Pennells, Consumer Finance Specialist at Royal London, said the new price cap is still 20 percent more than what people are paying now.
She said: “While it makes sense to target energy support at people on the lowest incomes, high energy bills affect households at all income levels.”
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She continued: “There will be many people who won’t qualify for help with their energy bills after the end of March, but who could struggle to afford to keep their home warm.
“The new energy price cap of £3,000 for a typical household, is 20 percent more than people are currently paying, and two and a half times where energy bills were last summer, when the typical energy bill was around £1,200.”
“There’s a particular concern for people who are on pre-payment meters, who may have no choice but to go without heating if they can’t afford to top up their meter.
“Meanwhile, people who signed up for fixed price tariffs in recent months may have switched to the standard variable tariff on the basis that the Energy Price Guarantee would protect them for two years, and could now be worse off if they don’t qualify for any targeted help.
“There may be pressure on the industry to address this in coming months.”
Richard Neudegg, director of regulation at Uswitch.com, said it will continue to be a difficult period for households who are trying to manage their finances.
He said: “From April, two key changes will happen. The average household energy bill will rise from £2,500 a year to £3,000, and the £400 energy bill support for all households will end.
“The current Government help means there is still protection in place for this winter. The impact of the changes will be mostly felt in winter 2023, when energy use is high and there’s no £400 support cushion.
He continued: “While there’s much talk of average figures, it’s important to remember that bills are not frozen. The Energy Price Guarantee is a cap on the unit rate of the energy you use – it is not a cap on your final bill. The less energy you use, the less you will pay, but it’s important to manage your energy usage in a safe way.
“Doubling the £6 billion investment in energy efficiency and insulation will be vital in cutting household energy costs and bringing bills down in the long term.
“It’s right that the Government is focusing on supporting those who need it the most, with vulnerable households more at risk of being forced into dangerous situations by high energy costs.
“If your energy account is going into debt or you are behind on your bill payments, speak to your provider as soon as possible.”
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