Energy companies have been told to prepare for a planned rise in bills to be ditched, sparing millions of housesholds a £500 increase in April.
The gas and electricity firms have been advised by the Government to consider keeping bills at their current level of £2,500 a year, as well as the scenario that they could still rise as previously planned to £3,000.
A Treasury source told the Evening Standard: “The Government keeps all of this under review. As part of that it would be irresponsible to not cover all bases when it comes to working with stakeholders like energy firms.”
Chancellor Jeremy Hunt is still finalising details of his March 15 Budget. But Money Saving Expert’s Martin Lewis believes there is now an 85 per cent chance that the Energy Price Guarantee will not rise by £500 next month.
He said that it was a “no brainer” to keep the average bill at £2,500 as it would avoid fuelling the cost-of-living crisis and inflation through higher bills. Energy companies should notifty customers “within reasonable time” of a looming price rise and April 1 is now just weeks away.
“What happened yesterday... that was the deadline for them telling the pre-payment meter providers... what the new April rates would be,” Mr Lewis told BBC Radio 4’s Today programme.
“What I have heard is some of the firms have kept it at the current rates.”
He added: “For firms it is easier to keep it at £2,500 and increase it to £3,000, than to reverse it the other way round and have to back pay. Now I’m hearing they have not been told that the rate is staying. They have been told that there is an attempt to keep the rate at £2,500. So we’re not at the smoking gun stage that this is definitely happening. But I would say we’re at an 85 per cent likelihood that the price won’t be going up.”
Mr Hunt has made clear that he is keeping under review the level of the Energy Price Guarantee which was introduced to protect households from exorbitant bills after the cost of gas and electricity sky-rocketed, largely due to Vladimir Putin’s war in Ukraine.
Even after the intervention, millions of households have cut back on energy use to keep bills down and make their weekly budget balance. Economists at the Institute for Fiscal Studies now say the Chancellor has some room for limited give-aways in the Budget after a boost to the public finances, with a £5 billion surplus in January.
Public borrowing for 2022/23 is £30.6 billion less than predicted by the Government’s fiscal watchdog, the Office for Budget Responsibility.
IFS director Paul Johnson has said Mr Hunt could “very easily within these numbers extend the Energy Price Guarantee for another three months to cushion people over the first part of the next fiscal year (April to June)”.
Fuel poverty campaigners are warning that the number of households struggling to afford bills could spiral from 6.7 million to 8.4 million as a result of the planned April rise.
Meanwhile, the Chancellor received some further good news today as figures showed the UK’s giant service sector bouncing back to growth in February.
The S&P Global/CIPS UK services PMI survey showed a reading of 53.5 in February, up from 48.7 in January and slightly ahead of market expectations. Any score above 50 is considered growth. It marks the first time since August that business activity and incoming new work both expanded.
