Martin Lewis has warned households to expect their energy bills to soar in the spring following Jeremy Hunt’s Budget U-turn today.
The new Chancellor has scrapped plans to continue the Government’s previously announced Energy Price Guarantee, which was due to see the average bill capped at £2,500 a year for the next two years. The support will instead end six months after it was introduced, in April 2023.
In a series of Tweets, MoneySavingExpert founder Martin explained what this will mean for people in the UK. While the Chancellor said that help will only be available to the poorest after April, Martin warned that even those on higher incomes will still need assistance with their bills when the Guarantee ends as the cost of living rises yet again.
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The financial expert said on Twitter: “The projected new energy price cap, that will start in April when the price guarantee ends, will be up 73% taking a bill for typical use (use more pay more, use less pay less), from £2,500 a year to £4,350. The cap will then be down 15% in July to £3,700 a year on typical use.”
Martin stipulated that these estimates are based on the assumption that the price cap system will be returning in April, and said that he was trying to confirm whether this would be the case. A treasury review will take place to decide exactly who will be eligible for further targeted help on their energy bills after April, and how much assistance they will receive.
Martin added: “If these [figures] are in the right ballpark, the promised ‘targeted help’ will need to be targeted up into the middle incomes for people to get through this. Especially if it stays at those levels for the next winter.”
In one of the biggest Budget U-turns in the UK's political history, Jeremy Hunt also scrapped nearly all of the remaining measures from Kwasi Kwarteng's mini-Budget - including £2bn changes to the IR35 tax rules for self-employed people, a £1bn cut in dividend tax, £2bn VAT-free shopping for visitors to the UK, and a £600m freeze on alcohol duty. He is also plotting to scrap plans to cut Income Tax from 20p to 19p in every pound next April.
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