“The government will support the British people, as they deal with the rising costs of energy.”
That was the reassuring claim made by the Chancellor of the Exchequer Rishi Sunak earlier today in his Spring Statement.
Energy bills have seen a huge hike during the last few months, with the price cap set to see an increase of £693 on bills from April.
This situation has been exacerbated by the ongoing crisis in Ukraine, with heavy sanctions imposed on Russian energy and a strain put on supply chains.
The Chancellor set out the government’s plans to help the British public cope with this economic strain in the House of Commons.
He announced immediate measures, including fuel duty being cut by 5 pence per litre, which he labelled “the biggest cut to all fuel duty rates ever”.
Petrol and diesel prices have been at an all time high recently, with MPs warned last week that prices of £2.50 per litre could be a possibility.
This cut will be in place until next March for a year and comes into effect from 6pm tonight.
On the impact of the Ukrainian war on British finances, he commented: “The invasion of Ukraine presents a risk to our recovery, as it does to countries around the world.”
“It is too early to know the full impact of the Ukraine war on the UK economy. But their initial view, combined with high global inflation and continuing supply chain pressures, means the OBR (Office for Budget Responsibility) now forecast growth this year of 3.8%. The OBR then expect the economy to grow by 1.8% in 2023 and 2.1, 1.8 and 1.7% in the following three years.”
A new funding plan was then announced to help low-income families cope with the energy price cap.
He explained: “We’ve announced a £9 billion plan to help around 28 million households pay around half the April increase in the energy price cap. People should be reassured that the energy price cap will protect their energy bills between now and the Autumn.”
“I am doubling the household support fund to £1 billion, with £500 million of new funding, local authorities are best-placed to help those in need in their local areas and they will receive this funding from April.”
To reward those taking steps towards greener energy sources, he announced: “For the next five years, homeowners having materials like solar panels, heat pumps, or insulation installed will no longer pay 5% VAT, they will pay 0%.”
“A family having a solar panel set installed will see tax savings worth £1,000 and savings on their energy bills of over £300 a year.”
He then stressed the need for preparation for the future state of pricing and the economy, stating: “Covid and global factors meant goods and energy prices were already high.”
“Disruptions to global supply chains and energy markets, combined with the economic response to Putin’s aggression, mean the OBR expect inflation to rise further, averaging 7.4% this year.”