Government extends energy bill support by three months ahead of ‘budget for growth’ – business live

The three-month extension of the energy price guarantee (EPG) at its current £2,500 level will save a typical household around £160, the Government says.

Prime Minister Rishi Sunak said:

“We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.

“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.”

[It’s important to remember that the EPG caps the unit cost of energy, not the total bill]

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The UK government has extended its support for households on their energy bills, following pressure not to push up bills and plunge many thousands of families into poverty.

Hours before Jeremy Hunt is due to announce the budget today, the Treasury has performed a U-turn and confirmed that the energy price guarantee will continue at its current rate until the end of June.

The EPG, which limits a typical annual household bill to £2,500, had been due to rise to £3,000 per year at the end of April.

Announcing the move this morning, the Treasury points out that energy bills are set to fall from July, due to the drop in wholesale price.

Chancellor Jeremy Hunt says:

“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.

“With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.

The about turn had been widely expected, and will relieve some pressure on households already struggling the cost of living.

Hunt had faced pressure from campaigners, charities and the consumer champion Martin Lewis to extend the EPG support. Citizens Advice had warned that without further support, milllions of households would have faced ‘catastrophe’ from April.

Hunt will deliver the budget at 12.30pm, outlining the government’s tax and spending plans.

It will be billed as a “Budget for growth”, and include measure designed to help more people into work.

It’s expected to include a £4bn expansion of free childcare for one- and two-year-olds in England. This which will provide an extra 30 hours a week to parents of one- and two-year olds, and increase funding by £288m by 2024-25 for the existing programme of free childcare for three year-olds.

New measure to encourage business investment, and offset some tax changes taking effect in April that will hit firms, are also expected.

Hunt has been examining whether to replace the super-deduction with a new “full expensing” system, which would let 100% of qualifying capital expenditure in the UK to be written off against taxable profits in the year it is incurred.

But the chancellor could also face a Tory back-bench revolt over the Budget as he pushes ahead with a rise in corporation tax from 19% to 25%.

The Daily Telegraph reports there is a growing backlash, with Conservative MPs fearing a “chilling effect on the whole economy” if the rise is not abandoned.

The agenda

• 9am GMT: IEA’s monthly report on the oil market

• 12.30pm GMT: Jeremy Hunt to deliver the Budget

• 12.30pm GMT: US PPI producer price inflation report

• 1.30pm GMT: Office for Budget Responsibility publishes its UK Economic and Fiscal Outlook