Healey Lines Up Over £1bn Against January’s Energy Bills
The chancellor is preparing an intervention worth more than £1bn at the 28 October Budget, most of it a bigger discount for households on certain benefits, after forecasts that the war with Iran will push the January price cap up by as much as £442. The most likely route is raising the warm homes discount from £150 by a further £100.
A £442 rise would entirely erode the VAT cut Andy Burnham announced on becoming prime minister, which is why the Treasury has moved at all. Mr Healey is expected to rebuff the energy secretary Miatta Fahnbulleh, who wants levies stripped from bills altogether — worth up to £120 off every bill, but costing as much as £3.2bn. Officials are working up two options for after the Budget: a social tariff, under which poorer households pay less per unit, and a rising block tariff, with a cheap essential block and a dearer one above it, a design the think tank Fahnbulleh used to run first proposed. Alex Chapman of the New Economics Foundation: “A serious price spike is coming, and without action, bills will exceed the peak of the last crisis.” Alfie Stirling of the Joseph Rowntree Foundation argues support “needs to support the majority of households” and should lower the price itself, thereby bringing down inflation. Against that, the chancellor has £4.7bn of extra defence spending to find and a fiscal buffer to rebuild, and is reported to be eyeing higher bank taxes. The Treasury would not engage. Watch what households above the benefit threshold are offered, because on this plan the answer is nothing.