Households are facing average energy bills as high as £5,000 from April following Liz Truss’s latest policy U-turn.
Under the government’s energy price guarantee, a typical household using both gas and electricity would have paid £2,500 annually for two years.
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The government said its new policy will “cost the taxpayer significantly less than planned” and will target those most in need of support.
Speculation is already underway on where this will leave energy bills in the spring. Ofgem, the regulator, has yet to set a cap for April, but the consultancy Auxilione “predicts that average bills could hit £5,078”, according to The Times. Other forecasters’ predictions are lower: RBC Capital Markets expects £4,684 a year, the Resolution Foundation £4,000 and Investec £3,923.
Meanwhile, tweeted Samuel Tombs, chief UK economist at Pantheon Macroeconomics, if Hunt lets Ofgem set the price cap again from April, “then current wholesale prices point to a 73% jump in energy bills, to £4,334, for those no longer receiving any support”.
There is uncertainty about who will receive support from April. The U-turn on energy “was of course forced by turmoil in the markets”, wrote Helen Thomas in the Financial Times, but the change of plan means “it is entirely unclear who will be supported, at what prices and in what way come spring”, she added.
National Energy Action told Sky News that ending the energy guarantee after six months is an “almighty trade-off” that has already caused “huge uncertainty”.
The fuel poverty charity’s chief executive Adam Scorer said: “Many vulnerable people were holding on by their fingertips. Government has to be very, very careful it doesn’t prise them away.”