Support for energy bills has been extended for a further three months, in an effort to ease the cost of living crisis as Jeremy Hunt sets out a “budget for growth”.
The chancellor confirmed that the energy price guarantee, which caps average household bills at £2,500, will be extended at its current level from April to June instead of going up to £3,000 as was previously announced.
The Treasury has come under increasing pressure in recent weeks to cancel the rise, which was set to come into force from April 1.
However, a £400 winter fuel payment will not be renewed, meaning households’ costs will still rise in the short term.
Mr Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee 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.”
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 energy price guarantee 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.”
Falling global energy prices mean that the current level will be extended to “bridge the gap” until costs are expected to fall below the cap.
Cornwall Insight forecasts that the Energy Price Cap – which is set by the energy regulator Ofgem and limits what suppliers can charge consumers per unit of energy – will fall to £2,100 a year for a typical household from July.
Experts have said that the energy bill support scheme, which was received by around 900,000 households in the UK, will not be needed due by the summer to falling market gas prices.