Chancellor Jeremy Hunt announced his first ever Spring Budget in the House of Commons on Wednesday Afternoon, in which he stated that he is extending support for household energy bills. The energy bill was due to rise to £3,000 from £2,500, but Hunt confirmed that the cap at £2,500 will be extended from April to June.
The chancellor predicted that the inflation would decrease from 10.7% in the final quarter of last year to 2.9% by the end of 2023 and the UK will escape recession.
How does the energy price cap work?
The energy price cap operates by placing a cap on the maximum amount are permitted to charge for each unit of gas and electricity.
Ofgem, which is a government regulator for downstream natural gas and electricity markets, sets a maximum daily that families must pay to connect their home to the National Grid.
Only the suppliers’ default and standard tariffs are covered by the cap on energy prices. thus, if you have a fixed-term energy contract, you are exempt from the cap.
The Echo reported that Prime Minister, Rishi Sunak feels that this will give “people some of mind” until summer which is when the gas prices are expected to decrease
Sunak added that, “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.”
Why was the energy support bill extended?
Hunt expressed that “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”. His revelation would ease the pressure on people and will also help lowering the inflation.
The government also announced that this measure will help a household an average of £160 on top of the energy support measures already announced.
“I was actually pretty surprised with the Spring Budget. Somehow, I didn’t expect the government to actually help us. They haven’t lowered the bill but they also haven’t increased it, which is the best thing,” said Sonia Volkov, 37, Sainsbury’s cashier at Waterloo.
“I am a mother of two very young children and I don’t want my children to freeze because we can’t afford it. It has been a very cold year, still is but this allows me to use the energy the same way as before which was really suiting us.”
Volkov was very “pleased” with Budget and it’s support for energy bills as well as for 30 hours of free childcare as she was considering moving further away from London so that her rent would be less and she could keep with the energy bills.
Delaying the anticipated 20% increase will cost the government around £3 billion, according to the Wandsworth Time.
Fuel Duty and Nuclear Power
Rishi Sunak temporarily cut the fuel duty rate as the chancellor last year from 57.95p per litre to 52.95p. Hunt has planned to the 5p fuel duty cut will be remain the same for the next year.
Hunt felt that it was not the right time to add the 5p per litre on fuel would put pressure on drivers, but with the cut not going back to normal, he confirmed that drivers could save between £100 to £200 a year.
“I am glad that the government didn’t add the fuel cut back, driving has become an expense,” said Pratham Gupta, 45, owner of a truck food stall.
Gupta used to set up his food truck in a lot of different places so that he could have more footfall, and more people could know about his stall. But since inflation caused by the cost-of-living crisis,, he only puts up his stall at Canada Water as it is most accessible area for him.
The Chancellor also confirmed that nuclear energy will now be classified as green which means it is environmentally sustainable. Sky reported that Hunt claimed that the electivity generated from renewables has increased from under 10% to 40% since Tories came back into power.
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