Energy bill crisis handouts to cost £23BILLION of YOUR money – new warning
Alastair Stewart slams energy companies over cost of living
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A paper by the Institute for Government (IfG) has warned massive extra borrowing would be required to repeat the handouts offered to households to help with energy bills earlier this year. The Government announced £33billion on helping ease the burden of the anticipated energy bill rise this autumn earlier this year, but the report warns a further £23billion would be needed to cover the expected additional rise in costs.
Annual average household energy bills are expected to top £3,000 from October, £900 more than was predicted just three months ago.
As it stands all households will receive £400 off their energy bills from October under plans outlined when Mr Sunak was Chancellor, with vulnerable households receiving even further support.
But Mr Sunak has vowed to go even further if he becomes Prime Minister in order to help households struggling to pay bills.
He said earlier this month that he wanted to keep “any one-off borrowing to an absolute minimum” but he would “provide direct support for families to help with the unprecedented situation we face”.
The IfG found that the additional £23billion that would be required to cover the bills increase in a few months’ time would rise to more than £90billion if the support was continued through 2023/24.
Liz Truss has sought to tackle the problem by reducing taxes on Britons.
She has vowed to reverse Mr Sunak’s National Insurance Contribution increase to give workers more of their own money back.
“What I really object to is taking money off people in tax and then giving them the money back in benefits,” she said at the weekend.
“That doesn’t make sense to me.”
However, she has hinted she would still give additional support to the most vulnerable households in the UK.
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The IfG found offsetting the energy bill increases for those on means-tested benefits would cost between £6-8billion in total, far less than the mass bailout of every household.
Olly Bartrum, a senior economist at the IfG said: “Energy prices have risen sharply again in recent weeks and are now expected to stay higher for longer than previously expected.
“Deciding whether and how to help households and businesses with these costs will be one of the most urgent tasks facing the new Government.
“This may require substantial extra spending this winter and even more again next year – even limiting help to the most vulnerable could cost several billion pounds.
“The Government should also do more to encourage greater energy efficiency and reform energy markets to reduce vulnerability to high energy prices if it wants to avoid further expensive support packages in a future likely to be defined by highly volatile energy prices.”
The body also warned about the cost of Labour’s energy plan to freeze energy prices at their current rate.
Sir Keir Starmer has suggested the policy would save households £1,000 a year, but the IfG warned it would cost the taxpayer £40billion over just six months.
It also warned it would be difficult to reverse the freeze at a later date.
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