This year’s spring statement was arguably the first of the UK’s “new normal”. Although neither Brexit nor COVID19 is done and dusted, they are both largely under control. That means the chancellor’s priority was and is to get the UK back on its feet. Here’s what Mr Hunt produced for people with debts and/or a low income.
Continued support to pay energy bills
The Chancellor’s announcement that there would be continued support to pay energy bills arguably came at a very opportune moment. Technically, it is now the start of spring. The clocks are due to change very shortly.
Practically, however, the weather has been a lot more like winter with cold, snow and heavy rain. Hopefully, this latest cold snap is the last farewell of winter 2022/2023. The arrival of the warmer weather should give UK households some welcome respite from high heating bills.
When the cold weather does roll around again, however, there should be further protection for hard-pressed UK households. The chancellor has maintained the Energy Price Guarantee at its current level for another three months instead of reducing it as planned. This means that the average household can expect to continue to pay around £2500 per year for energy instead of £3000.
Householders may understandably be concerned about what happens after three months. The answer to that question will probably depend on what happens in the interim. Three months from the start of the financial year is early July. That’s about two months away from when people need to start thinking seriously about winter energy bills.
It’s probably safe to assume that the government will use this time to get a clearer picture of the likely situation going into winter. If necessary, they’ll take further measures nearer the time.
The Energy Bills Support Scheme (EBSS) comes to an end
The EBSS saw the government pay £66 per household to energy providers. This was then credited to the household’s account. The ending of this scheme was arguably entirely predictable. It is also not a huge cause for concern.
Right now, the UK is coming into its warm season. This means that households will have less need for heating. Per the previous comments, in the run-up to the autumn, the government will presumably reassess the situation.
Realistically, it seems unlikely that they will provide another round of universal support. It is, however, very likely that they will offer some form of targeting support if necessary. This will probably be aimed at people in receipt of certain benefits.
The “prepaid premium” is removed
The updated Energy Price Guarantee will prevent companies from charging “prepaid premiums”. This change will take effect when the new EPG does, i.e. in July. This move will doubtless be welcomed by the approximately 4 million households with prepaid metres. It may, however, have unintended consequences.
The reason the prepaid premium exists is that prepaid metres are more complicated to manage than metres for properties that pay in arrears. This differential may be reduced through the rollout of smart metres. It may not, however, be completely eliminated.
If it isn’t, then the cost of managing prepaid metres will have to be picked up by somebody. In principle, energy companies might absorb it. In practice, they are not doing so now so there seems no reason to assume that they will do so in the future. This means that the extra costs will increase either bills or taxes for other people.
Extra childcare for working parents
In one of his most attention-grabbing moves, Mr Hunt announced the rollout of 30 hours of free childcare per week for working parents with children aged between 9 months and 4 years. The childcare provision will start to be increased from April 2024 and will be implemented in full from September 2025.
Additionally, parents on universal credit will be able to have their childcare costs paid upfront instead of having to reclaim fees they have already paid.
In principle, this is great news for working parents. In practice, questions are already being asked about whether the funding announced for the scheme will really be enough to bring childcare providers on board.
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