THE GOVERNMENT spent nearly £40 billion protecting households and businesses from spiralling energy bills over the colder months, new figures today show.
Putin’s illegal invasion of Ukraine led to unprecedented turmoil in global energy markets and made a huge impact on the energy bills of households around the world. In the UK, without government intervention households would have seen bills peak at almost £4,300 per year.
In response the government covered around half a typical household bill over the winter – and today, the sheer scale of that financial support is revealed for the first time. £39.3billion was spent between October 2022 and March 2023, the most ever provided to subsidise household bills in UK history. This was in part funded through taxing energy producers’ excess profits, with the government’s windfall tax on producers expected to raise almost £26 billion by March 2028.
And with moves to shore up the country’s energy security, wholesale costs have now come down two thirds from their peak in the first quarter of the year. The UK has seen a full year without using Russian gas, while accelerating the move towards renewables and alternative sources of supply such as liquefied natural gas imports.
Energy Security Secretary Grant Shapps said: “Putin’s illegal invasion of Ukraine and his reckless attempts to hold the West to ransom sent energy prices spiralling around the world.
“We acted swiftly and decisively to protect families and businesses from the full impact of that shock – covering around half a typical energy bill over winter. This helped safeguard jobs and livelihoods, and enabled many families to heat their homes.”
“And we will not stop leading the world in standing up to Putin, helping countries around the world to move away from Russian fossil fuels – just as we have done having not used any Russian gas for the past 12 months.”
Chancellor of the Exchequer Jeremy Hunt said: “Putin’s weaponisation of global gas prices meant our energy bills soared, which is why we stepped in with immediate relief and cut the typical household energy bill by around half last winter, driving down inflation and relieving pressure on families”.
Improvements in the wholesale market mean energy regulator, Ofgem, has been able to reduce their price cap from £3,280 now to £2,074 in July. As a result, the average household bill is expected to fall £426 lower than current charges under the Energy Price Guarantee, which will also help further lower inflation overall. The government is committed to halving inflation by the end of the year.
Today’s figures demonstrate the historic scale and nature of the schemes put in place to support households. The figures involved mean around £2,500 was shelled out every second since October to keep energy costs down, as Ofgem’s cap rose to almost £4,300 at the peak of the energy crisis – saving the average home roughly £1,500 by June.
The figures show that from October up to the end of March, almost £21bn went towards the Energy Price Guarantee. An expected £12bn has been paid out under the Energy Bills Support Scheme, which offered homes £400 payments towards their bills over winter.
Meanwhile, businesses and other organisations benefitted from a £5.5bn boost under the Energy Bill Relief Scheme, the government’s primary non-domestic support scheme over the winter. A further £933mn was spent on other government energy support schemes, including alternative schemes providing support for households and businesses off-grid and those using alternative fuels.