Government measures to reduce immediate impact of Energy Prices

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Following today’s announcement that the Energy Price Cap will rise almost £700 from April, the Chancellor announced Energy prices measures to alleviate the immediate impact for consumers and reduce pressures on household finances.

It would be easy to view this as good news for retail, but the reality is that many households will be partly shielded from the increase in energy prices, but at most households will only be shielded from £350 of the £700 costs they now face.The Chancellor expressed the support as being generous, comprehensive saying “This government has announce measures to share the burden with consumers and help manage the global price rise.

The Energy Price Cap increased by £139 from £1,138 to £1,277 on the 1st of October 2021. Today it rose again by a massive £693 increasing the average household bill by £1,971. For those on a pre-payment meter the price cap from April is even higher at £2,017.

The immediate Energy Prices measures announced are:

  • Households in council tax bands A to D will receive a one off £150 council tax rebate in April which will never need to be repaid.
  • Domestic electricity customers will receive a £200 discount on their electricity bills from October. This discount is designed to spread the cost over a much longer period and so will be clawed back in annual instalments of £40 over a five year period. It’s not so much reducing bills as spreading the pain of the increase over a longer period. The gamble is of course that energy prices will fall again but there is no guarantee that will happen.

Whilst this assistance will be welcomed by households, although perhaps not that welcome as they are still facing average energy price increases of £350 even after the council tax rebate and £200 discount, it doesn’t nothing to assist business energy costs.

We are already seeing price increases on just about everything including food and assistance paying rocketing household energy prices can do nothing other than lower consumer confidence and their spending power. The next few months will be a rocky time for the economy and that means challenges for retailers who still need to run profitable businesses.


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