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Energy bill help to be reduced 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, 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 limits 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".
He said the most vulnerable would continue to be protected from soaring wholesale energy prices.He said the most vulnerable would continue to be protected from soaring wholesale energy prices.
The move sparked concern among consumer groups who warned households would be plunged into uncertainty.The move sparked concern among consumer groups who warned households would be plunged into uncertainty.
"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."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?""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.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."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.
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
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.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.
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.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.
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 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 - who was sacked on Friday - followed it with plans to cut taxes by some £45bn. However, former chancellor Kwasi Kwarteng 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". He added that the Energy Price Guarantee had been "the biggest single expense" of Mr Kwarteng's growth plan.
But it called the the government's failure to provide any official costing of the plans "extraordinary and deeply disappointing". When it was announced, many had criticised the scheme for not being targeted enough, arguing the support should have been means tested.
"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. The Institute for Fiscal Studies think tank, which had described the package as "clearly not sustainable in the long-term", welcomed Mr Hunt's decision.
Others has criticised it for not being targeted enough, arguing that the support should have been means tested. "While large-scale untargeted support for households this winter was perhaps unavoidable we need to do everything possible to put in place a better designed, better targeted and less expensive scheme next year," said IFS director Paul Johnson.
"Even a slightly less generous scheme could save billions, mean less government debt needs to be sold, and therefore reduce future [government] interest payments."
Call for clarity
But the Centre for Ageing Better, a charity, said many older people faced an anxious wait to find out how much help they would get.
Boss Carole Easton said: "The previous two-year promise provided a level of security for people in uncertain times.
"It is vital that the government gives plenty of advance notice with clear messaging as to who will be eligible for targeted support in April."
Under Ms Truss's scheme, businesses are protected for six months from soaring energy prices, with those struggling most set to continue receiving help pending a review.
Mr Hunt suggested the targeted approach would continue, but the Federation of Small Businesses (FSB) called for clarity.
"The review to come on business and consumer energy support after six months must avoid a cliff-edge for small firms that remain impacted and vulnerable," said the FSB's national chair, Martin McTague.