Against the backdrop of industrial action, inflation and the cost of living crisis, Jeremy Hunt has submitted his first spring budget to cover energy, childcare and pensions.
The focus of Jeremy Hunt’s budget is returning to work for those over 50, chronically ill, disabled and benefit claimants. Free childcare, a lifetime pension allowance, and an extension of utility bills are also planned.
Hunt also added that the UK is no longer expected to enter recession this year, based on the Office of Budget Responsibility (OBR) forecasts.
His speeches are delivered as teachers roam England and Wales and 100,000 civil servants.
Here is an analysis of the Prime Minister’s key announcements:
What about utility bill support?
The Prime Minister confirmed that the Energy Price Guarantee (EPG) has been extended for another three months.
EPG currently caps the average home energy bill at £2,500 per year.
The guarantee was due to become more generous from April as Ofgem’s energy price cap will rise to £3,000 at the same time the universal rebate ends. This adds up to an additional £900 on average annual utility bills.
The Treasury estimates that universal expansion will save the average household about £160.
However, household costs will still rise in the short term as the £400 universal energy payment will not be renewed.
Energy is separately regulated in Northern Ireland, with bills held at £1,950 a year for the average household.
Prime Minister Jeremy Hunt said:
“With energy prices dropping from July onwards, this temporary change will help bridge the gap and ease the pressure on families while also helping to lower inflation.”
The three-month extension will cost governments around £4bn, but lower wholesale energy prices have so far not cost governments as much as EPG had been expected. means That said, these price declines have cost oil and gas companies around £7bn in revenue from windfall tax and corporate tax on energy.
£45 off your prepaid energy meter bill
Upfront energy bills will come in line with customers paying by direct debit amid controversy over how vulnerable households are being billed.
Households with prepaid meters are typically vulnerable or low-income.
But energy companies are passing on the cost of managing the meters, so they’re paying more.
Under the new rules, fees will be flattened from 1 July 2023. The government estimates that this could save 4 million households about £45 a year on their energy bills.
The surcharge will instead be covered at a cost of £200 million under the government-funded Energy Price Guarantee.
fuel duty
The fuel tax is set to rise each year in line with the Retail Price Index (RPI) measure of inflation. However, it has been scrapped for the past 11 years.
The Prime Minister confirmed that it will remain frozen for another 12 months. This saves drivers 7p per liter of fuel.
A temporary five-pence cut in fuel taxes announced by former Prime Minister Rishi Sunak will also be extended for another year.
In total, you save about 12 pence of fuel per liter.
What’s Happening With Inflation?
According to OBR, the price increase or inflation rate is expected to drop to 2.9% by the end of 2023.
This will bring reassurance to households that have struggled with price increases of over 11% over the past year.
Inflation is now at 10.1%, well above the Bank of England’s benchmark of 2%.
Last November, the OBR projected average inflation of 7.4% in 2023. Now he expects it to be 2.9% by the end of 2023.
