Energy price caps starting from April next year could be up by 73% after the UK Government announced it would withdraw support for energy bills.
New forecasts, from independent energy researchers Cornwall Insight, reveal a major hike in consumer prices following the announcement that the domestic Energy Price Guarantee will end in April 2023.
A bill for typical use, on the basis of a use more pay more model, could rise from approximately £2,500 per year to £4,350 for April to June.
This figure could dip by 15% in July to September to around £3,700 and will then stabilise around that level with £3,720 for the October to December period.
New UK chancellor Jeremy Hunt pulled back on the energy price cap promises amid reversals of almost all tax cuts originally announced in the government’s mini budget.
In an emergency statement he said: “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.”
Responding to the findings, money saving expert Martin Lewis said: “If these are in the right ballpark, the promised ‘targeted help’ will need to be targeted up into middle incomes for people to get through this. Especially if it stays at those levels for the next winter.
“This is subject to the fact that the price cap in its old form will continue which is the standard working assumption, but not yet confirmed.”
In analysis of the Chancellor’s announcements on Monday, Cornwall Insight CEO Gareth Miller wrote: “Now constructive attention needs to turn to what a replacement scheme looks like from April to ensure that those who need support receive it, and that whatever options are taken forward can form the foundation stones of an enduring, fair and sustainable market after the current crisis subsides.
“A world in which we move back to the default tariff cap cannot credibly be one that is amongst those options given the heightened cost environment likely to prevail in the medium term and the situation that arose before the EPG was implemented.
“Work on refined domestic support, alongside developing a prospectus for what replaces the Energy Bill Relief Scheme for business, will now need to begin and begin rapidly. There are many ideas in circulation from the summer which I expect Cornwall Insight will be consolidating and evaluating in the coming weeks.
“It will be vital that a Treasury led review avoids falling into a public finance led approach that is too far removed from social and economic realities for households. Hearts as well heads will need to be engaged.”