Two government sources said there had been an active debate in the Treasury about announcing the level of support since April, after Jeremy Hunt, the chancellor, scrapped Liz Truss’ plan to keep the current cap at £2,500 for a typical annual account for two years. A government source said no decisions had yet been made but that raising the level of the cap while adding extra support for vulnerable people was “one of the options”. The Treasury does not have to announce the level of energy support it plans to provide until the spring and may choose to wait until it is clear whether gas and electricity prices will fall. But the costs involved are so significant that ministers and officials are considering whether to set out the estimated level of support in the autumn statement, with the added benefit that it can help people prepare for what they might have to pay. The autumn statement is likely to contain a number of politically difficult decisions, from raising some tax thresholds to raising capital gains and dividend taxes, as well as spending cuts and the possible delay of welfare reforms. Hunt can also go ahead and raise the windfall tax on oil and gas producers to continue paying for billions in extra support. It could also limit the income of electricity producers. He had previously said he wanted to ensure the energy price system moved towards a more targeted program to help those who needed it most. However, it is understood that continuing some universal level of support, possibly in the form of a higher energy cap, is also on the table. Figures from the Bank of England’s latest monetary policy paper show that its experts have assumed that government support will continue for households about halfway between the current cap of £2,500 and the projected energy price. This is forecast to be around £3,700 in the quarter from April and around £3,200 next quarter, which could suggest a peak of around £2,850 to £3,100. However, this does not take into account that support could be more weighted towards the most vulnerable. The energy price guarantee was announced in September by Liz Truss as a two-year measure for all households and was later reduced to six months to the end of March, followed by further, more targeted support. An “observation window” used by the energy regulator, Ofgem, to calculate the price cap will close next week. Analysts at City bank Investec predict the cap for the first quarter of next year will be £4,211, although the price guarantee means this amount does not affect household bills, just the amount the Treasury will pay suppliers energy. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. The price cap for the three months from April, which will affect consumers, is set to drop to £3,750 and then £3,192 for the next quarter. That would still be well above the £1,277 price cap at this time last year. Investec analyst Martin Young said: “Next week’s budget statement may well bring clarity on government intervention in power generation, but as we head into winter it is clear that for many, the visibility of continued aid with high energy bills are imperative for physical and mental well-being. This is very much a test of whether the government “gets it”.
