Ofgem energy price cap falls - but average household bills still expected to rise

The energy watchdog has reduced the energy price cap to £3,280 effective from 1 April. It's currently £4,270. Despite this, bills are still expected to rise by 20% because the Government's energy price guarantee, which caps House or bills at £2,500 annually, will rise to £3,000. The Chancellor, Jeremy Hunt, is facing calls from opposition parties to keep the support at the current level in his spring budget next month. Let's get more on that, should we? And Goprit is here with us. So the ceiling's come down, but our bills are still going to go up. Yeah, it's a bit complicated.

But when you add up all the numbers, actually the result is that households and businesses are worse off as a result of it. So this should be good news. Of jam set, something called the energy price cap. It limits the amount that energy suppliers can charge per unit of electricity and gas. It's announced today that from April, that figure will be coming down, so much so that a typical household, this isn't everyone, this is just a typical household based on typical usage, would see their bills go down from £4,279 a year to £3,280. But the Government has intervened over the past few months and set a cap of its own, so that households don't have to pay any more at the moment than £2,500. That's rising to £3,000 from April.

So it means all of our bills will be going up. And of course the real winner out of all of this is the Treasury, because the Treasury has been absorbing that shortfall. And at the beginning of the year, it thought they would be having to shell out about £18 billion. It's come right down. It's fallen by about 90%. So as you can imagine, there are now calls on the Chancellor to use some of those savings that he's made to extend the support that he's currently offering to households, so that fewer households fall into fuel poverty and fewer businesses go bust. It's not means tested, is it? No, it's not.

And this is actually a really big issue, because Jeremy Hunt has made it his stated aim to try and bring down inflation. And there's a real argument that this support, it's offered to everyone, whether you're rich or whether you're poor, it's putting more money into people's pockets, which could fuel inflation over the coming months. If you fuel inflation, that leaves everyone worse off. And some are saying that a better policy would be a more targeted policy, so you give them money to the people that really need it, while also keeping a lid on inflation.

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