Universal support for household energy bills will not be extended beyond spring 2024, confirmed Jeremy Hunt.
The Chancellor told MPs at the Treasury Committee people will “have to take responsibility” for their bills as he urged the public to “play your part” in cutting energy usage.
He revealed future interventions in the market will be scaled back, and instead target at only the poorest households.
Hunt also confirmed that support to help households will cost £80bn this year and “possibly around half that next year” – coming to an overall total of £120bn.
This means the packages for households will cost nearly double the £70bn Covid furlough relief scheme during the pandemic.
He said: “We are saying to people that in the end everyone is going to have to take responsibility for their energy bills.
Price cap to be unveiled despite Hunt support
In one of his first acts as Chancellor, Hunt slashed the Energy Price Guarantee two years to six months.
The scheme subsidised the difference between record wholesale rates and a set rate of 34p per kilowatt hour (kwh) for electricity and 10p per kwh for gas.
This meant energy bills for average use were constrained to around £2,500 per year, despite the price cap rising to £3,549 per year over the same time period.
Hunt then extended the support a further 12 months during his autumn statement, but increased the amount an average household will pay to £3,000 from April.
Meanwhile, energy specialist Cornwall Insight has released their final forecast for the price cap in January 2023.
It predicts the price cap will rise to £4,245 per year – with Ofgem set to confirm the figure tomorrow morning.
The support package means households will not be paying it, but it does reflect the reality of wholesale costs and buying gas with season ahead contracts amid volatile market conditions.
Its predictions for the proceeding three cap updates next year are £3,921 per year in April, £3,358 per year in July and £3,370 per year in October.
If accurate, this means the Government will still be subsidising thousands of pounds of bills early next year.
Cornwall Insight has raised its own predictions for the cost of the price guarantee to £42bn, up from £38bn just one week ago.
Meanwhile support for businesses is set to be reviewed by the end of the year, with the current package on course to expire in April.