The government announced in the Spring Statement 2022, published in March 2022, that it will phase out the import of Russian oil by the end of 20221. The commitment was set out alongside a wider package of measures on energy bills and energy saving materials, and the government said it would work with industry through the Taskforce on Oil1.
The Spring Statement states that the UK is "a net energy importer with a high dependence on gas and oil"1. It records that global oil prices rose 9.3% between the week beginning 14 February and the week beginning 14 March, that UK and European wholesale gas prices increased by more than 30% over the same period, and that petrol pump prices in the UK were at record highs, having increased by almost 12% over the past month1. Inflation is forecast to be 7.4% in 20221.
The document also says the energy price cap protects consumers from the rapid changes observed in the wholesale energy market in the short term1, and that the government will soon be setting out an energy security plan, which "will include measures across hydrocarbons, nuclear and renewables"1.
On household energy costs, the Spring Statement says the government will expand the scope of VAT relief available for energy saving materials and ensure that households having energy saving materials installed pay 0% VAT, with the changes taking effect from April 2022, a year earlier than previously planned1. It also confirms the £9 billion package announced in February to help households with rising energy bills this year, and provides an additional £500 million for the Household Support Fund from April, on top of the £500 million already provided since October 2021, bringing total funding to £1 billion1.
Other measures in the statement include a temporary 12 month cut to duty on petrol and diesel of 5p per litre, taking effect from 6pm on 23 March on a UK-wide basis, described as a saving worth around £100 for the average car driver, £200 for the average van driver and £1,500 for the average haulier compared with uprating fuel duty in 2022-231. The National Insurance Primary Threshold and Lower Profits Limit will increase from £9,880 to £12,570 from July 2022, and the basic rate of income tax will be reduced to 19% from April 20241.
"the government has announced that it will phase out the import of Russian oil by the end of 2022"
Why it matters for households
The UK's exposure to imported oil and gas is the backdrop to household bills. The Spring Statement's own framing, that the UK is a net energy importer with a high dependence on gas and oil, links the price of imported fuel to what households pay for heating and transport1. Phasing out Russian oil imports by the end of 2022 changes where that oil comes from, not how much of it the UK uses, and the statement gives no figure for the share of UK oil imports that come from Russia, so the scale of the change for the UK market has not been reported1.
For a home's energy independence, the measures with the most direct effect are the VAT relief on energy saving materials and the wider energy security plan. The VAT change reduces the cost of installing insulation and similar materials from April 20221. The energy security plan, covering hydrocarbons, nuclear and renewables, had not been published at the time of the statement1. The energy price cap remains the mechanism the government cites for shielding consumers from short term wholesale price movements1, and the regulation-policy hub covers the wider framework.
What happens next
The VAT relief for energy saving materials and the Household Support Fund increase take effect from April 20221. The National Insurance threshold change takes effect from July 2022, and the basic rate of income tax cut from April 20241. The government said it will soon set out an energy security plan, but no date for that publication is given1.
Sources1 cited
- Spring Statement 2022, assets.publishing.service.gov.uk