UPDATED ON 20th OCTOBER DUE TO CHANGES IN THE FINANCIAL ASSISTANCE AND LIZ TRUSS RESIGNING
The bold move made by the now outgoing Prime Minister Liz Truss, which offered an energy price guarantee package by freezing the energy cap from 1st October 2022 to £2,500 for two years, was backtracked by the new Chancellor, Jeremy Hunt.
The new price guarantee will now last for only six months, which means that the price rise that came into force in October 2022 has been softened, but it does mean that households can expect a hefty price increase, from April 2023, with some analysts suggesting a rise of some 75%! The government has pledged a more targeted approach to help those struggling with energy costs in April, but it's yet to be announced what this will consist of and if the new Prime Minister, whoever that will be this time, will still honour this. Its hoped this will still be a sizeable package, made more cost-effective by targeting only those who really need the help, rather than a blanket energy cost-helping strategy, which offers financial assistance to not only those in dire need but to everyone, even if the recipient was a financially stable and in no need for the assistance, a strategy which was given a negative reaction by many, and ultimately will have played its part, (among many other things of course!), the downfall of the PM.
Perhaps the new PM will be able to look at the help again and fine-tune the assistance; however, after the recent financial turmoil caused by the previous mini-budget, I suspect the new PM won't want to announce any further changes for some time; if at all!
The current £400 payment to households (Paid as £66 a month to the energy suppliers every month over winter), which was set out by former chancellor Rishi Sunak earlier this year, will is ongoing, with many having received the first payment, helping towards the new energy costs that kicked in this month. The current price freeze means the average household energy bills will be around £2500 over a year; however, with new pricing from April, that will now be pro-rata!
Remember: The price cap is on standing charges and unit rates; there has been confusion in the past as to the term price cap; it doesn't mean your bill is capped at £2,500; if you use more energy, your bill will be higher; it's not a reason to no longer worry about using the heating and lights, the more fuel you use, the more you will pay!
Last winter, the cap was £1277, and so the current freeze is still twice what you might have paid last winter, so you will still be paying more, so all the energy use hints and tips you've no doubt come across over the last few months are still just a relevant, and even more so from April!
All the extra benefit payments being paid to those who qualify will also not be affected, including the rest of the £650 payments (half has already been paid out), the disability payment of £150, and the pensioner's £300, which will still be paid as previously agreed.
Time will tell what will happen when the new PM comes into power and if she/he will look at any changes to the cut-down energy relief scheme. Still, for now, we do have energy cost help, and there is a relief that winter won't be as expensive as it could have been, but of course, the new costs of energy in 2023 will be playing one everyone's mind, as I'm sure April will be with us before we know it!