Emergency Budget Announcement: Expert Reaction To New Uk Chancellor's Attempt To Calm Financial Markets - Rolling Back Energy Price Support

18th October 2022

Andrew Burlinson, Lecturer in Energy Economics, University of East Anglia and Catherine Waddams, Emeritus Professor of Economic Regulation, Norwich Business School, University of East Anglia.

The new chancellor has a chance to ease the pressures facing some of the most vulnerable energy consumers in the UK. We welcome the continued promise of help for all until April 2023, and the opportunity to target help more to those who most need it after that.

The government is right to take time to explore how best to achieve this challenging combination of objectives, including protection of households in the most vulnerable circumstances. The £2,500 limit on the average bill under the energy price guarantee scheme is more than £1,000 less than the Ofgem price cap it replaced. But the energy price guarantee will still see the average household paying twice as much this winter compared to the same time last year.

More protection is needed for those households who struggled to afford the prices faced last year, never mind this year. By adjusting the current package, the government could move towards supporting those most in need with a new social tariff, by coordinating with Ofgem to rebalance the prepayment price premium, and establishing vital channels for advice and financial assistance to those in energy debt.

The Government must further reconsider imposing a windfall tax on energy companies to help pay for these measures, as well as considering how to bolster energy efficiency schemes to improve the warmth and comfort of homes and the health of those most in need.

On the other hand, all other households will become more exposed to the volatility shaping the energy market. Given other cost of living pressures, many may still need some help when the energy price guarantee is reviewed next spring. Government objectives should include consumer protection, inflation reduction, market confidence and an ambitious programme of carbon reduction.

Note
This is part of an article from the conversation web site.
See it in full HERE