Measures to support households with their bills and increase the country’s energy security and independence are at the heart of the Budget announced by the Chancellor.
With Putin’s illegal war raging in Ukraine, Energy Security Secretary Grant Shapps said the moves will be vital to help people until global gas prices fall further as expected.
Delivering on the Prime Minister’s priorities to ease the cost of living and grow the economy, the Chancellor set out new bold commitments to extend energy bill support for households and to invest in carbon capture, low carbon hydrogen and nuclear as part of a ‘clean energy reset’ to ensure the UK’s energy security in the long term.
The new commitments support the Energy Security Secretary’s ambition for Britain to have among the lowest wholesale electricity prices in Europe by 2035, driving economic growth in the longer term while strengthening the UK’s energy security and independence.
Secretary of State for Energy Security and Net Zero Grant Shapps said:
This Budget supports both our immediate and longer-term priorities – bringing energy bills down and keeping them down, while also setting Britain on a path to greater energy security and independence.
Not only will this help achieve our mission for wholesale electricity prices to be among the cheapest in Europe, but it will also help grow our economy through new cutting-edge industries, supporting investment and creating jobs.
Providing energy bills support for households
The Chancellor set out further support to ease cost-of-living pressures on households, including keeping energy bills down to help reduce inflation, and ending the premium that over 4 million households pay on their prepayment meter.
Extending energy bills support
- The Energy Price Guarantee (EPG) will remain at £2,500 for an additional 3 months from April to June
- energy prices are 50% lower than forecast in October, but remain higher than they were before the war in Ukraine, meaning this support will help bridge the gap for families ahead of an expected fall in prices in July
- the Energy Price Guarantee protects customers from increases in energy costs by limiting the amount suppliers can charge per unit of energy used
- this follows previous government support provided over this winter which has already cut the typical household energy bill by almost half
Ending the ‘prepayment penalty’
- The government is taking action to end the ‘prepayment penalty’, introducing fairness reforms to energy bills to remove the premium paid by households using prepayment meters (PPMs)
- this will cut energy bills for over 4 million families across the UK by bringing their costs into line with those paid by comparable customers on direct debits, saving them £45 a year on energy bills. The change is expected to come into effect from July 1 through updates to the Energy Price Guarantee
Delivering a clean energy ‘reset’
To shield households from high energy bills in the future, there will be a ‘reset’ to clean up the UK’s domestic energy supply and boost long term energy security. This will help achieve the Energy Security Secretary’s mission for the UK to have among the cheapest wholesale electricity prices in Europe.
Investing in carbon capture, usage and storage (CCUS)
- The Chancellor announced £20 billion investment to transform carbon capture in Britain, supporting the early development of CCUS to put the UK at a strategic advantage by being a global frontrunner in this developing new green technology
- this funding will help secure long-term energy security while helping create up to 50,000 jobs
- CCUS will cut emissions while ensuring a diverse energy supply. This process captures and safely stores CO2 produced from burning gas or waste to generate electricity, from new low carbon hydrogen production for use across the economy, and other industrial processes, like creating cement, deep underground offshore
- the UK has enough carbon capture capacity to store over a century and half of national annual CO2 emissions, making it well-placed to become a world-leader in the carbon capture market. Accelerating the UK’s carbon capture and low carbon hydrogen industries will help grow the economy by encouraging investment into the country, and support the UK’s industrial transition to cleaner, greener processes and technology
- this unprecedented investment over the next 20 years will put us on track to store 20-30 million tonnes of CO2 a year by 2030 - equal to emissions from 10-15 million cars – helping us meet our net zero goals.
Accelerating new nuclear power
- The government is launching Great British Nuclear (GBN) to support new nuclear builds as the government works towards net zero, helping address any constraints in the nuclear market
- first announced in the British Energy Security Strategy, GBN will enable an ambitious civil nuclear programme and ensure the UK is one of the best places in the world to invest in new nuclear
- the intention is that GBN will launch the first staged competition for Small Modular Reactors, which is expected to attract the best designs from both domestic and international vendors
- the initial focus for GBN will be on Small Modular Reactors, but it will support government’s consideration of further large gigawatt-scale projects to help us deliver on our net zero ambitions
- GBN is intended to play a fundamental role in the delivery of clean, safe electricity for generations to come, ensuring our country is no longer at the mercy of global fossil fuel markets and setting us inexorably on the path towards net zero
- further details on GBN’s set up, leadership and operations will be announced by the end of March
In addition, to encourage private sector investment into our nuclear programme, the Chancellor confirmed that, subject to consultation, nuclear power will be classed as environmentally sustainable as part of the tax framework, incentivising private investment in this important technology alongside renewables. Further details will be set out by the Treasury in due course.
