Chancellor Jeremy Hunt will ‘almost certainly’ extend the energy price guarantee into the summer, major think-tank forecasts
- Families braced for prices to rise by a fifth after Hunt cut subsidies from April 1
- But a sharp fall in price of wholesale gas means Chancellor is under pressure
The Chancellor will ‘almost certainly’ extend the £2,500 energy price guarantee into the summer, according a major think tank.
Families are braced for prices to rise by a fifth after Jeremy Hunt cut subsidies from April 1 in a bid to shore up the public finances.
Prices will now rise to £3,000 per year for the average home, and push up bills for users of pre-payment meters from £202 to £247.
Mr Hunt has come under increasing pressure to maintain the price guarantee at £2,500 after a sharp fall in the price of wholesale gas, saving the Treasury billions of pounds.
Now the Resolution Foundation has predicted Mr Hunt will cave and return some of the savings to families by extending the £2,500 scheme until June.
The Chancellor, pictured on February 2, will ‘almost certainly’ extend the £2,500 energy price guarantee into the summer, according a major think tank
Mr Hunt has come under increasing pressure to maintain the price guarantee at £2,500 after a sharp fall in the price of wholesale gas (file image)
This would ‘smooth out the rollercoaster’ of household energy prices until wholesale energy prices fall further.
Current predictions put the price of an average household gas and electric bill at around £2,400 from July 1, below the level when Government subsidies kick in.
Extending the scheme would cost the Treasury £3billion, but even with this extension the scheme would still cost around £10billion less than originally planned.
Torsten Bell, chief executive of the Resolution Foundation, said: ‘The cost-of-living crisis is the backdrop to this Budget, and is where families are focused.
‘So, despite headlines saying “Energy bills extra support ruled out by chancellor”, the Chancellor will have more to say on the topic.’
He said the ‘rollercoaster’ pricing ‘makes little sense’, adding: ‘The solution is pretty obvious. The Treasury can – and almost certainly will – delay the increase in the Energy Price Guarantee for three months to give wholesale prices time to feed through.’
The move would also help to bring inflation down, the think tank added, from a forecast 8.4 per cent between April and June, down to 7.5 per cent.
Treasury sources last night played down the speculation.