The government has published a Growth Plan aimed at delivering higher, sustainable economic growth with an ambitious target of 2.5%, with plans that will boost investment, create skilled jobs, improve living standards and make Britain an even better place to do business. The Department for Business, Energy and Industrial Strategy (BEIS) will have a key role to play in working towards this target.
The plan lays out the biggest package of tax cuts and reforms in a generation, to encourage investment and make work pay. The planned rise in corporation tax has been cancelled, keeping it at 19%, while changes to income tax and national insurance will see over 30 million people receive a tax cut. Stamp Duty cuts will also help people on all levels of the property market.
Alongside addressing the immediate challenges of high energy costs through support for households and businesses, the government recognises the importance of acting now to grow the economy. Ultimately, growth means more jobs, higher pay and more money to fund public services, like schools and the NHS.
Cutting energy bills for households and businesses
Support for Households: Energy Price Guarantee
On 8 September, the Prime Minister announced the Energy Price Guarantee.
The Energy Price Guarantee will ensure that a typical household in Great Britain pays an average £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022, with an equivalent scheme in Northern Ireland from November.
The consumer saving will be based on usage, but a typical household is expected to save at least £1,000 a year (based on current prices from October). Energy suppliers will be fully compensated for the cost of the Energy Price Guarantee. Based on 2019 median consumption, houses will save around £1,000 a year, and flats will save £700 a year.
£150 of this saving will be delivered by temporarily transferring the cost of environmental and social costs, including green levies, to the Exchequer for 2 years. This will mean customers don't bear the costs, but benefit from the low-carbon electricity generation.
This support is in addition to the £400 Energy Bills Support Scheme available to all households. This will be paid in 6 instalments from October.
An additional payment of £100 will be provided to compensate for the rising costs of alternative heating fuels for those UK households who are not able to receive support for heating costs through the Energy Price Guarantee.
The most vulnerable UK households will continue to receive £1,200 of support (including £400 from the Energy Bills Support Scheme) provided in instalments over the year.
Support for businesses and non-domestic properties
Through the new Energy Bill Relief Scheme (EBRS), the government will provide support with energy bills for all non-domestic consumers in Great Britain and Northern Ireland (including charities and public sector organisations).
This 6-month scheme will protect them from soaring energy costs by providing a discount on wholesale gas and electricity prices.
It will apply to energy usage for all non-domestic energy users from 1 October 2022 to 31 March 2023.
Equivalent support will be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas (further detail on this will be announced shortly).
In Northern Ireland, the scheme will be established on the same criteria and offering comparable support, but recognising the different market fundamentals
We will publish a review into the operation of the EBRS in 3 months to inform decisions on continued support after March 2023.
Reform to tackle root causes in the energy sector
While the interventions for households and businesses will be funded by the government, action is being taken to significantly reduce the cost over time.
A new Energy Supply Taskforce - The new Taskforce will seek to negotiate long-term agreements with major gas producers. BEIS is also working with low carbon electricity generators to reduce the link between gas and electricity prices. Successful action should smooth the price of wholesale gas and electricity over time. Such action should also increase security of supply over time, reducing the likelihood of similar energy price crises in the future.
Energy Markets Financing Scheme - Together with the Bank of England, HM Treasury are providing
