The Treasury can and almost certainly will delay the increase in the Energy Price Guarantee (EPG) for three months.

That’s the key message conveyed in new analysis by the think tank Resolution Foundation which estimates that such a move could increase the cost of the scheme by £3 billion but still leaves more “significant savings”.

Last Friday, speaking to broadcasters, the Chancellor highlighted the need to be “responsible with the public finances”, hinting at the government’s decision to stick to the rise in the EPG to £3,000 from April.

The authors of the report estimate that the “most acute problem” will arise for those on prepayment meters who are likely to see their monthly bills rise by 22% from March to April if the increase in EPG moves forward.

Resolution Foundation said: “Falling wholesale prices knocked 90% off the estimated cost of the EPG next year. Even if the Chancellor chooses to iron this temporary bill rise out, the cost of the EPG in 2023-24 will still have fallen by around two-thirds since last November.”

A HM Treasury spokesperson told ELN: “Wholesale prices falling is good news, but as we have all seen, prices are volatile and can increase as fast as they fall. If prices return to their late August level, the government would need to borrow an extra £42 billion and potentially increase taxes to continue funding the EPG at current levels.

“The way the EPG operates means households will still see lower bills if gas prices continue to fall. To support families in the meantime, we are providing millions of vulnerable households with £900 in direct cash payments this year, plus a record increase in the National Minimum Wage and a 10% uplift in working-age benefits and the state pension.”