Jeremy Hunt announced in his first financial statement that the Energy Price Cap Guarantee, which was introduced by Liz Truss’s Government in September, will be under review. The price cap guarantee was one of the first policies announced by Liz Truss when she won the Conservative election in September. The price guarantee capped how much energy providers can charge for gas and electricity for the next two years.
Ms Truss stated that the move would mean the energy bill for an average household would be around £2,500, for two-years.
The Prime Minister had to clarify that the price guarantee was not a cap on bills, and had to reiterate that energy bills could be more expensive the more energy that is used.
In his statement, Mr Hunt said: “Today I want to confirm that the support we are providing until April next year will not change.
“But beyond that, the Prime Minister and I agreed that it would not be responsible to continue exposing public finance to unlimited volatility in national gas prices.”
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Mr Hunt announced that the Government will launch a Treasury-led review into how it can support households and businesses with energy bills next year.
The objective of this review will be to “design a new approach” that will cost the taxpayer “significantly less” than originally planned.
The Chancellor also said in his statement that any support for businesses will be targeted to those “most affected”.
Mr Hunt stated that the new approach will aim to “better incentivise energy efficiency”.
“People will simply be unable to heat their homes. Meanwhile, families face rising costs from every direction, largely exacerbated by government implosion and market instability.
“While Hunt’s appointment may provide Truss’ premiership temporary salvation, these new measures will be a reckoning for the public.
“Just as serious is the erosion of any trust people may have had in the Government. So many U-turns, a Prime Minister now overseeing a fiscal plan completely at odds with the one she campaigned on to get into Downing Street, and the lack of clarity over long-term plans make it impossible for households across the UK to manage their finances and plot a way through the cost-of-living crisis.”
Money Saving Expert Martin Lewis, who has campaigned for more support from the Government with energy bills over the last year said the energy price guarantee was “always expensive”.
Reacting to the financial statement on Twitter, he said: “While energy intervention was desperately needed – a universal energy price guarantee was always expensive and poorly targeted.