No further energy bill support before October price cap rise, say government sources

Government sources have indicated that households should not expect further financial support for energy bills before the upcoming price cap adjustment in October. This means consumers will likely face a 4% increase in gas and electricity prices without immediate additional government relief.

While the government previously reduced VAT on domestic electricity bills, a move that saves the average household £45 per year, officials are hesitant to promise further broad support. However, sources suggest that more targeted measures might be explored if energy prices experience another significant shock in January.

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No government can stop the squeeze felt by families and businesses with a global shock of this magnitude. It’s being felt around the world. But we can keep close watch as we move towards the New Year, and we remain focused on giving families a bit of breathing space with the cost of living.

These potential price hikes are partly attributed to global energy market fluctuations, including the conflict involving Iran and the closure of the Strait of Hormuz. "No government can stop the squeeze felt by families and businesses with a global shock of this magnitude," stated Chancellor John Healey, acknowledging the worldwide impact of these economic pressures.

The Resolution Foundation, a thinktank with close government ties, has proposed a proactive approach. They suggest designing and preparing targeted support measures, ready to be implemented from January. This support would aim to assist households earning under £24,000 annually, potentially offering average savings of £175 to approximately 40% of households. The thinktank warns of a real risk of further price rises in January, given recent wholesale gas price increases.

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The rise in energy bills in October has been tempered but not avoided by the government’s decision to reduce electricity bills for everyone through a VAT cut. With wholesale gas prices hitting new post-Iran highs in the past week, there is a real risk of further rises in January. Given the acute pressure on both family and government budgets, we need a better mechanism for targeted support ready to activate if needed.