Energy price cap hike: how might the UK government help with bills?
Britain’s cost of living crisis is likely to intensify from Thursday as the energy regulator prepares to raise the maximum price of home energy bills by up to 50% above current record highs.
The price cap is expected to reach almost £2,000 a year, up from an average of £1,277 this winter, to reflect the recent surge in gas market prices which has inflated supplier costs – and caused many to go bust.
Officials across Whitehall have been locked in talks with industry bosses for months and the watchdog Ofgem to draw together a set of measures which could cushion households against rocketing energy bills and a cost of living crisis.
But what steps could the government take in the face of a global energy crisis? Here are the most popular options to emerge:
Industry sources believe the Treasury may be poised to help cut £200 from energy bills by offering suppliers government-backed loans which could be repaid over several years.
The £5.4bn plan would protect household budgets from a breakneck increase in their average energy bill from 1 April when the new price cap takes effect. But it could mean energy bills remain higher for longer as suppliers charge more to pay back their loans in the years ahead.
The plan, first reported in the Times, was described as “entirely plausible” by one industry source, who asked not to be named, and is seen as one of the most likely measures.
In addition to the Treasury’s broad-brush plans it is likely to also take a targeted approach to helping the most vulnerable households by doubling the payments offered by the warm home discount.
The scheme provides a one-off annual payment of £140 towards electricity bills for households on low income or receive certain pension benefits between October and March.
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