£800 plunge in energy bills to hand Hunt £11bn Budget boost

In a timely boost ahead of the Spring Statement in March, the Chancellor has gained extra financial firepower thanks to the shrinking cost of the Energy Price Guarantee.

Gas prices have plummeted since the guarantee was launched, dramatically cutting how much the Government must pay to keep household energy bills down.

Under the scheme, bills are being subsidised from October 2022 to March 2024, limiting what a typical household pays this winter to the equivalent of £2,500 per year.

In mid-November, the Treasury said it expected the total cost of support to be £37.6bn.

But with gas prices having plunged since then, analysts at Cornwall Insight and the Institute for Fiscal Studies (IFS) said they now expect the final figure to be roughly £11bn lower, or around £26bn.

It comes after the benchmark European price for natural gas hit an 18-month low, after a mild winter reduced demand for heating and kept Continental gas storage levels high.

Tom Edwards, a senior modeller at Cornwall Insight, said that “barring another major crisis”, it looked as though prices would settle at a new level that was higher than before the Ukraine crisis but far below the worst peaks of the past year.

He said: “All things being equal, it looks like we're probably not going to return to the spikes that we saw last winter.

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