Energy support is set to be slashed for millions, as Chancellor Jeremy Hunt prepares to unveil the support plan for 2023. He is set to unveil another £5 billion of energy help for businesses for the next financial year, which is a sharp drop from last year’s £18billion package. The Chancellor will set out the plans for the support later today, which will kick in from April 2023.
While the Government is unveiling support for another year, it will in effect be a drop in support from what is currently offered.
Rather than tapering the support down, the new package of support will be a sharp drop from what is currently offered.
Under the current systems, firms are given a price per unit of electricity.
But under the new system, firms will receive a discount on each unit of gas and electricity.
While the support is being dropped, wholesale gas and electricity prices are also falling, which the Government hopes will close the gap in support.
Long-term support from 2024 onwards is yet to be confirmed but is likely to depend on how much further gas prices fall.
The Chancellor is also expected to announce more generous targeted support for energy-intensive industries, such as steel and ceramics, under the new scheme.
Speaking about the upcoming package of support, a source told the Telegraph: “The Government is subsiding every household and business with their energy costs. It is not sustainable in the long run.
“That is why we are currently carrying out a review with the aim of reducing the public finances’ exposure to volatile international energy prices from April 2023.
“We will announce the outcome of this review in the New Year to ensure businesses have sufficient certainty about future support before the current scheme ends in March 2023.”
The UK has been grappling with soaring energy prices and double-digit inflation in the aftermath of the coronavirus pandemic and Putin’s invasion of Ukraine.
The country has seen a fall in living standards as people continue to be hit with declining pay, higher taxes and soaring bills.
But economists from thinktank Resolution Foundation wanted that households are facing a “groundhog year” in 2023, with disposable incomes expected to fall even further this year.
They warned that living standards are likely to get “far worse” before they improve.
Resolution Foundation chief executive Torsten Bell said: “From a cost of living perspective, 2022 was a truly horrendous year – far worse than any year in the pandemic or financial crisis.
“2023 should see the back of double-digit inflation, but it looks set to be a groundhog year for many families whose incomes look set to fall by just as much as they did in 2022.”
Mr Bell said many families will be helped by benefits and the National Living Wage rising, both by around 10% next April.