LONDON (AFP) – Britain’s household energy price guarantee will cost some GBP23 billion this winter, analysts estimated after regulator Ofgem lifted its cap on electricity and gas charges.
The state’s outlay for the policy, aimed at easing a cost-of-living crisis, will stand at GBP950 per home over the colder winter months, according to a LinkedIn post by research consultancy Auxilione.
Ofgem announced on Thursday it will lift its so-called cap, which sets prices for consumers to an annual level of GBP4,279 in January from about GBP3,500.
The cap does not currently affect consumers but will slam the public purse because the government is heavily subsidising bills.
Since October, Britain has frozen the average annual bill at GBP2,500 as it seeks to cushion homes from rocketing energy prices after the war in Ukraine.
The state guarantee will rise to GBP3,000 in April as part of last week’s tax-hiking austerity budget.
Official data showed on Tuesday the energy price freeze added GBP4.0 billion to state borrowing in October alone. The government has forecast that its energy price guarantee will cost GBP25 billion in 2022/2023, and a further GBP13 billion in 2023/2024.
Prime Minister Rishi Sunak has meanwhile agreed to a public information campaign to encourage Britons to save energy, media reported on Thursday.