The government is maintaining the Energy Price Guarantee at £2,500 for a typical household for a further three months from April 2023, rather than allowing it to rise to £3,0001. The Spring Budget, presented to Parliament on 15 March 2023, set the level until the end of June 2023; the guarantee was then due to increase to £3,000 from July 2023 to March 20243. The National Insulation Association said the three-month extension was expected to save households an average of £160 on their energy bills2.
The Budget also aligned charges for comparable direct debit and prepayment meter customers, so that those on prepayment meters no longer pay a premium for their energy costs1. The change covers more than 4 million households on prepayment meters2. The Welsh Government's Minister for Social Justice, Jane Hutt, welcomed the decision to bring prepayment charges into line with direct debit customers, calling the prepayment penalty "manifestly unfair", but said standing charges for prepayment customers remained an injustice and that she had called for their removal4.
The £400 Energy Bill Support Scheme discount, paid to every household with a domestic energy connection in Great Britain across winter 2022 to 2023, ended in March 20233. Jane Hutt said it was disappointing the payment was ending in April, meaning a typical household would pay £400 more for energy from April4. The Chancellor did not announce a repeat of the scheme for the following winter5.
Analysts differed on what the Budget meant for annual bills. Which? estimated a median-usage household would pay £135 more in 2023/24 than in 2022/23, with an annual bill rising from £1,983 to £2,118, and that the average household in the lowest 10% of incomes would pay £209 more5. The End Fuel Poverty Coalition, citing Energy and Climate Intelligence Unit calculations, said bills were calculated to rise by £285 a year for 2023/246. National Energy Action predicted the number of households in fuel poverty would grow to 7.5 million as a result of the Budget announcement6.
"I welcome the announcement it will remain at £2,500 until July for a typical household"
The Budget also set out energy supply measures: launching Great British Nuclear to support new nuclear builds, making up to £20 billion available for carbon capture, utilisation and storage, and extending the Climate Change Agreement scheme by two years, worth approximately £600 million in support, so participants meeting energy efficiency targets receive reduced Climate Change Levy rates in 2025-26 and 2026-271. A call for evidence on VAT relief for energy saving materials, including a proposal to include electrical battery storage, closed on 31 May 20232.
| Measure | Detail |
|---|---|
| Energy Price Guarantee | £2,500 for a typical household until July 2023, then £3,000 to March 20243 |
| Prepayment meter charges | Aligned with direct debit from April 20231 |
| Energy Bill Support Scheme | £400 per household, ended March 20233 |
| Alternative Fuel Payment | One-off £200 for households using heating oil, LPG or coal, from February 20233 |
Why it matters for households
The guarantee caps the unit price of gas and electricity rather than the total bill, so a household using more than the assumed typical consumption pays more than £2,5003. The typical household figure is an illustrative annual bill, not a limit. Because the £400 discount ended at the same time as the guarantee was extended, many households faced higher costs in 2023/24 than in 2022/23 even though unit prices were lower5. Which? found the increase was larger for lower-income households, because lower usage means less benefit from falling prices while the loss of the £400 is the same5. The End Fuel Poverty Coalition noted that customers paying by standard credit, such as cash, cheque or bank transfer, pay £202 a year more than those on direct debit or prepayment, and that some regions, including Merseyside and North Wales, pay 6.7% more for electricity than others such as the East Midlands6. For a household's energy independence, the guarantee is a temporary price support rather than a change to how bills are set, and it does not reduce the amount of energy a home needs to buy.
What happens next
The guarantee was set to rise to £3,000 from July 2023 to March 20243. The government said in the November 2022 autumn statement that it would take a "new approach to consumer protection from April 2024", working with consumer groups and industry on options including social tariffs, but had not published that consultation3. The Energy Price Guarantee is set to end in 20243. Jane Hutt said she was meeting Ofgem chief executive Jonathan Brearley again at the end of March, after Ofgem announced on 14 March that the ban on forced prepayment meter installations would be extended beyond the end of March and lifted "only when and if" firms follow its new code of practice4.
Sources6 cited
- Spring Budget 2023 (HTML) - GOV.UK, gov.uk
- Budget 2023 Summary - National Insulation Association, nia-uk.org
- CDP-2023-0202.pdf, researchbriefings.files.parliament.uk
- Written Statement: Cost of Living - Energy Crisis (28 March 2023) | GOV.WALES, gov.wales
- gm-e86bf5ed-35f4-49a3-9f33-095ec99f084d-household-energy-costs-in-202324.pdf, media.product.which.co.uk
- Energy bills still set to rise despite Budget - End Fuel Poverty Coalition, endfuelpoverty.org.uk