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Energy bill help to be scaled back from April, says Jeremy Hunt Energy bill help to be reduced from April, says Jeremy Hunt
(32 minutes later)
A scheme to cap all household energy bills for two years will be cut from April as the government looks to save money, the new chancellor has said. A scheme to cap all household energy bills for two years will be cut from April, the new chancellor has said.
Jeremy Hunt said the support - which limited a typical household bill to £2,500 - would be reviewed so it cost "significantly less than planned". Jeremy Hunt said the support - which limits a typical household bill to £2,500 - would be reviewed so it cost "significantly less than planned".
But he said he would ensure there was enough support for those most in need. He said the most vulnerable would continue to be protected from soaring wholesale energy prices.
The government stepped in last month to protect consumers from soaring energy bills after Russia invaded Ukraine. The move sparked concern among consumer groups who warned households would be plunged into uncertainty.
But Mr Hunt said it would be "irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices". "Everyone knows why decisions have been made at breakneck speed, but there are questions that need to be answered, and answered quickly," said National Energy Action boss Adam Scorer.
"Who will still get support? Will it include vulnerable households not on welfare benefits? Will that support be deeper for those in greatest need?"
Mr Hunt is trying to save money after the government's mini-budget left a big projected hole in the public finances. Its plan for large tax cuts sparked turmoil on financial markets over how the plans would be funded.
"Beyond [April], the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices," the chancellor said.
"The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need," he said."The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need," he said.
Under the Energy Price Guarantee, Ms Truss's government had capped all household energy bills for two years from 1 October in a bid to prevent millions facing hardship this winter.
Before this guarantee was introduced, the energy price cap - the highest amount suppliers are allowed to charge households for every unit of energy they use - had been due to rise to £3,549 for a typical household from October.
What Jeremy Hunt's statement means for youWhat Jeremy Hunt's statement means for you
Two thirds of tax cuts from mini-budget reversedTwo thirds of tax cuts from mini-budget reversed
Pound rises as chancellor moves to calm marketsPound rises as chancellor moves to calm markets
The decision to scale it back from April sparked concern among consumer groups who warned households would be plunged into uncertainty. Under the Energy Price Guarantee, announced last month, Ms Truss's government capped all household energy bills for two years from 1 October in a bid to prevent millions facing hardship this winter.
"Everyone knows why decisions have been made at breakneck speed, but there are questions that need to be answered, and answered quickly," said National Energy Action boss Adam Scorer. Before this guarantee was introduced, the energy price cap - the highest amount suppliers are allowed to charge households for every unit of energy they use - had been due to rise to £3,549 for a typical household from October.
"Who will still get support? Will it include vulnerable households not on welfare benefits? Will that support be deeper for those in greatest need?"
Consumer rights campaigner Martin Lewis said that while the support for intervention had been desperately needed, a "universal energy price guarantee was always expensive and poorly targeted".Consumer rights campaigner Martin Lewis said that while the support for intervention had been desperately needed, a "universal energy price guarantee was always expensive and poorly targeted".
But he added: "The post-April support will still need to reach a decent way up the net and support middle earners, energy rates are still huge."But he added: "The post-April support will still need to reach a decent way up the net and support middle earners, energy rates are still huge."
Ms Truss's support plan - thought to cost up to £150bn - was to be funded through government borrowing after the prime minister rejected calls to extend a windfall tax on oil and gas firms. Ms Truss's plan - thought to cost up to £150bn - was to be funded through government borrowing after the prime minister rejected calls to extend a windfall tax on oil and gas firms.
However, former Chancellor Kwasi Kwarteng followed it with plans to cut taxes by some £45bn. However, former chancellor Kwasi Kwarteng - who was sacked on Friday - followed it with plans to cut taxes by some £45bn.
Concerns about rising borrowing sparked turmoil on financial markets which spilled over into the mortgage market, where interest rates on loans have surged to 14-year highs.Concerns about rising borrowing sparked turmoil on financial markets which spilled over into the mortgage market, where interest rates on loans have surged to 14-year highs.
The Bank of England also had to step in to protect pension funds put at risk by the volatility.
On Monday, Mr Hunt promised to review the energy support while also reversing £32bn worth of the planned tax cuts. The new chancellor said he was doing "what is necessary for economic stability".On Monday, Mr Hunt promised to review the energy support while also reversing £32bn worth of the planned tax cuts. The new chancellor said he was doing "what is necessary for economic stability".
In September, the Institute for Fiscal Studies think tank described Ms Truss's energy price support package as "a huge policy intervention".
But it called the the government's failure to provide any official costing of the plans "extraordinary and deeply disappointing".
"The scale of support will mean that each extra £1 households spend on energy is likely to cost the taxpayer 75p over the next year. This is clearly not sustainable in the long-term," it said.
Others has criticised it for not being targeted enough, arguing that the support should have been means tested.