John Healey has unveiled a package of support for households being buffeted by \u201cglobal economic storms\u201d.<\/p>\n
\u201cI\u2019m setting a new course to get energy costs down in line with Europe,\u201d the chancellor said in his maiden budget. In the long term, he hopes that changes in how Britain covers the cost of renewables and grid upgrades will \u201cdrive down all aspects of energy bills\u201d.<\/p>\n
British households face some of the highest energy charges for three years, with the war in the Middle East driving up oil and gas prices.<\/p>\n
Under the government\u2019s price cap, average dual-fuel bills are \u00a31,700 a year and could rise to more than \u00a32,100 a year from January, according to industry forecasts<\/a>.<\/p>\n So what has the chancellor offered hard-pressed households to help them through the coldest months of the year? And will it be enough to lower gas and electricity bills?<\/p>\n The \u00a3100 \u2018household energy payment\u2019<\/p>\n The government\u2019s biggest bet on offering \u201cbreathing space\u201d to struggling households this winter is a one-off payment of \u00a3100 in January for 20m households in council tax bands A to D. It is also the measure most likely to deliver real benefit for those in need.<\/p>\n The \u00a32.6bn \u201chousehold energy payment\u201d will go directly into bank accounts to \u201ctake the pressure off in the coldest months and see people through to the spring\u201d, according to Healey.<\/p>\n Martin Lewis, the founder of MoneySavingExpert.com, said households could face a 25% cost increase from January and shouldn\u2019t expect to feel better off than they do today.<\/p>\n Officials are anxious to avoid handing public money to those who can get by without it but they lack household income data to target proposed support. Using council tax bands is \u201cthe least worst proxy\u201d, Lewis said.<\/p>\n The payment will be in addition to the Warm Home Discount, which offers about 6m means-tested households in England, Wales and Scotland \u00a3150 off winter fuel bills.<\/p>\n A chart showing how poor households could miss out on the \u00a3100 energy payment<\/a>An end to gas standing charges<\/p>\n This measure will offer a modest saving for most British households \u2013 but not all, and perhaps not until next winter.<\/p>\n Healey promised to end \u201cunfair and outdated\u201d standing charges on gas bills for 23m homes \u201cin 2027 or as soon as possible after\u201d. This could help almost two-thirds of households to save an average of \u00a345 a year.<\/p>\n A standing charge is a fixed daily fee paid through all household gas bills, regardless of how much is used. It means homes that severely ration their gas use \u2013 or use none at all \u2013 still shoulder the same cost as a high-income household.<\/p>\n The charge typically adds about \u00a3100 a year to bills and the change means these costs will soon be recovered through a higher unit price for gas. For those with below-average gas use, bills should fall. But there won\u2019t be savings for everyone.<\/p>\n Jonny Marshall, an economist at the Resolution Foundation, said households with high gas use might have higher bills when the unit rate increases. These could include low-income households who have bigger families or poorly insulated homes.<\/p>\n A home using 7,000 kilowatt hours of gas a year would save about \u00a340 under the change, but a household using 14,000 kWh of gas a year could be \u00a325 worse off, according to Richard Neudegg, a director at Uswitch.com. A household using the typical 11,500 kWh shouldn\u2019t see any change, he added.<\/p>\n Removing standing charges from gas bills will help two-thirds of households save an average of \u00a345 a year. Photograph: Paul Melling\/AlamyLower electricity levies<\/p>\n The government has already begun taking aim at taxes and policy costs loaded on to electricity bills that could over time mean removing hundreds of pounds from bills.<\/p>\n This month, it removed the 5% VAT levy<\/a> on electricity bills for 29m households, effectively saving them about \u00a345 a year.<\/p>\n This was supposed to help households through the coldest months of the year, until March. But Healey has promised to keep VAT off bills until July, extending the annual savings to \u00a350 a year, according to the Treasury.<\/p>\n The move follows a string of cuts to electricity levies over the past year which have shaved about \u00a3150 a year off costs.<\/p>\n \u201cFor many years, under Conservative governments, policy costs were simply loaded on to household bills through levies,\u201d Healey said. \u201cToday, I am putting an end to that. We\u2019ll introduce a new cost control framework to drive down all aspects of energy bills.\u201d<\/p>\n Healey confirmed he would consider steps to remove standing charges on electricity too, which \u200badd about \u00a3200 a year to the average \u200bbill. The savings from this measure remain unclear, depending on which costs would move into general taxation and which would be covered through the unit price for electricity.<\/p>\n Healey will continue to alter a subsidy scheme for the UK\u2019s oldest renewable energy projects, around three-quarters of which has been removed from bills and covered by general taxation. The research charity Nesta said this would lower electricity costs by \u00a342 a year.<\/p>\n Healey has scrapped plans for a levy to support hydrogen projects that would otherwise have added \u00a32.60 to \u00a34.50 a year to the average dual-fuel bill.<\/p>\n Low-carbon home upgrades<\/p>\n The government believes that households could save up to \u00a3550 a year on energy bills<\/a> if they invest in solar panels, home batteries and a heat pump. These savings could rise by a further \u00a3300 a year with a time-of-use tariff, according to the government.<\/p>\n To help households access these savings, a Warm Home Loans scheme, which launched on Tuesday, will offer government-backed loans of up to \u00a335,000 for low-carbon energy alternatives.<\/p>\n The government said it was committed to rolling out heat pumps through its boiler upgrade scheme, which provides grants of up to \u00a37,500 to help meet the \u00a313,600 cost of installing one.<\/p>\n Grants of up to \u00a39,000 a year are available to households that are not connected to the gas grid and rely on high-cost heating oil.<\/p>\n Energy debt relief<\/p>\n For many, the government\u2019s new measures will come too late to help this winter. But there could be support in the spring from a debt relief scheme.<\/p>\n The government said the delayed scheme will \u201cprovide targeted support to customers in genuine financial need\u201d. Total household energy debt has tripled from 2021 to a record \u00a35bn and could reach \u00a37bn by the end of the year<\/a>.<\/p>\n The one-off, targeted intervention has been designed to help those with debts from the 2022-24 energy crisis and little prospect of repaying them.<\/p>\n