Jeremy Hunt confirms plans for more targeted energy price support for homes
New Chancellor Jeremy Hunt has confirmed that plans to protect all British homes from rising energy prices, originally set to have run until October 2024, will now be reviewed in April 2023.
Hunt was appointed Chancellor late last week after Prime Minister Liz Truss sacked former Business and Energy Secretary Kwasi Kwarteng from the role. The decision was made after the measures announced in Kwarteng’s uncosted mini-budget led the pound to plummet.
As expected, Hunt announced the reversal of several measures first announced by Kwarteng.
Basic income tax rates were due to be cut from 20% to 10% in April 2023. This plan has been shelved and will “only take place when the economic conditions allow for it”. Also shelved is a planned freeze to alcohol duty rates.
These changes build on U-turns already confirmed by Truss. She had already confirmed that plans to reduce taxes for those earning £150,000 or more would be scrapped, alongside plans not to increase corporation tax.
The Treasury is now claiming that its changes will be worth some £32bn annually.
Some of this funding will be used for schemes designed to shield homes and businesses from abnormally high gas and electricity prices. Hunt confirmed that, while Truss had originally planned to shield all homes from Ofgem’s forthcoming price cap increase until October 2024, new plans will now be drawn up.
The original freeze for homes will now apply universally until April 2023. A treasury-led review will be conducted to ascertain what will change after that point, to deliver a scheme that costs less. Hunt hinted that the changes will result in a more targeted scheme, with those most in need receiving a bigger subsidy towards their bills.
Also up for review will be the Energy Bill Relief Scheme for businesses. This was only intended to be in place, in its current form, for six months. The Treasury will now develop a next stage – again to be implemented from next April. The next stage will be targeted at businesses in most need of support and will also provide some form of incentive for businesses to improve energy efficiency.
Hunt is expected to make another statement on 31 October.
There is still no word on additional funding for improving energy efficiency of homes, which many citizens’ groups and environmental NGOs and think-tanks have been calling for for months. The idea is that this would better shield homes, in the long-term, from volatile gas prices, by decreasing their use.