The government has said it will extend financial support for domestic customers for three months following an energy campaign backed by several charities.
In February, financial journalist Martin Lewis named Citizens Advice, Fair By Design, National Energy Action, and StepChange in a letter to chancellor Jeremy Hunt, urging him to postpone a planned 20% increase to the Energy Price Guarantee (EPG).
The government today announced that the EPG would remain at the same level until the end of June, meaning it will subsidise average household energy bills to remain at £2,500 a year compared to energy regulator Ofgem’s current price cap of £3,280.
Ahead of today’s spring budget, the government said this three-month discount would be worth £160 for a typical household.
It said the total cost of the EPG from April to June would be £4bn, £3bn more than if it had increased the EPG to £3bn as previously planned.
Hunt also announced that the government would bring pre-payment meter costs in line with direct debit payments.
Charities including Mencap and National Energy Action welcomed the government’s u-turn but warned that households still faced high energy bills.
PM: Extension intended to give people ‘peace of mind’
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 EPG 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.”
Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the EPG 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.”
Charities: ‘Sense has prevailed’
Peter Smith, director of policy and advocacy at National Energy Action, said: “Today’s budget announcement means average annual energy bills will stay around £2,500 instead of soaring to £3,000 - something we have campaigned for.
“Sense has prevailed and the government is shelving plans to make things even tougher for households. But that still means bills have more than doubled since start of the crisis.
“With the Energy Bill Support Scheme ending, the need for targeted support for the most vulnerable households is as urgent as ever.”
Dame Clare Moriarty, chief executive of Citizens Advice, said: “This welcome step will protect millions of people from unaffordable energy bills.
“Unfortunately it’s not all good news. The withdrawal of the Energy Bill Support Scheme will still mean the average monthly bill rises by £67 from April.
“With millions already unable to afford their bills and energy prices set to remain high in the years ahead, the government must now look at long-term solutions to this problem. Many people, especially those on low incomes, will need ongoing support not only to pay their bills but to make their homes safer and warmer through improved energy efficiency.”
Maddy Rose, policy specialist at Mencap, said the extension would prevent “an unnecessary cost of living cliff-edge in April for thousands of people with a learning disability and their families”.
“However, people with a learning disability don’t just need prices to stay the same,” she said.
“Given that average bills have more than doubled since the start of the crisis, and with other increased cost-of-living pressures that disproportionately impact people with a learning disability, the government must now urgently commit to long-term targeted support and introduce a discounted social energy tariff.
“The tariff must be progressively funded, appropriately targeted to include people with a learning disability and provide a significant discount on the unit rate of energy.”
Daniel Jennings, senior policy and campaigns officer at Epilepsy Action, said a further rise in energy costs would have had “devastating consequences, especially for the most vulnerable, including people with a disability such as epilepsy”.
“We have proudly supported Martin Lewis and Money Saving Expert’s campaign to postpone the new rise, and are pleased to see this has been taken into consideration in the new budget,” he said.
“We will still push for additional support for the most vulnerable, but are satisfied with the energy price guarantee staying in place until the summer.”
WellChild chief executive Matt James welcomed the extension but said that for the “families WellChild supports who care for children with complex medical needs at home it just doesn’t go far enough”.
“The average energy bill for a family with a disabled child is twice that of the average household. Many rely on electrical equipment round the clock such as ventilators and feeding pumps just to keep their children alive. What is needed is more targeted support aimed specifically at them.”
Graham Duxbury, Groundwork’s UK chief executive, said: “We are glad to see the government extending support with energy bills for a further three months and taking steps to tackle the injustice of higher costs for people on pre-payment meters. However, more needs to be done to ensure everyone is able to access the energy they need to stay warm and well.
“To avoid people suffering unnecessarily in the winters to come, we need a radical plan to eliminate fuel poverty, through increasing the energy efficiency of homes, providing better coordinated advice to the most vulnerable energy users, and investing in the skills and jobs we need to transform our energy infrastructure. Doing this is vital to preventing the worst effects of climate change, reducing health inequalities and creating more prosperous communities.”
Richard Lane, StepChange director of external affairs, said: “Extending the energy price guarantee will be a huge relief for millions of households but energy prices are still markedly higher than they were 12 months ago, and with real wages not keeping up with inflation, many families will still be struggling to afford their energy bills.”
Joanna Elson, chief executive of the Money Advice Trust, said: “This budget gives households some much-needed certainty on energy costs beyond April – and the decision to bring pre-payment energy meter costs in line with direct debits is also welcome, if long overdue.
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