Sunak’s spring measures for poorer households look little more than hopeful
The best news (but, critically, still not good news) for hard-pressed energy consumers this week could be found away from the chancellor’s tweaks to national insurance thresholds on Wednesday. It was the calculation by the consultancy Cornwall Insight that the energy price cap may not hit £3,000 when next adjusted in October. The latest estimate, derived from observing wholesale prices for gas and electricity, is £2,512.
There is no sense in which the £500-ish difference can be considered a saving, of course. An average bill for households of £2,500 or thereabouts would still be a mighty increase from the £1,971 that will apply from the start of next month, which itself is a jump from £1,277 today.
Instead, the volatility in estimates is a reminder that a lot can happen in the course of a few weeks or months. Today’s wholesale energy prices look slightly less horrible than those of a couple of weeks ago, but the position can flip again. The “observation window” for the October price cap runs until the end of July.
Thus Rishi Sunak’s measures for low-income households look little more than hopeful responses that could be overtaken by events. The relative value of a national insurance reform worth £330 a year for an average worker depends in large part on whether that worker’s household is facing an increase in energy costs of £700 or £1,500 or more in the next year. Cuts to fuel duty may help at the margin but could also be rendered irrelevant by market forces.
Sunak, remember, unveiled his £9bn energy-specific package for consumers in January – so before Russia’s invasion of Ukraine created more market pressures – and the only directly related addition on Wednesday was an extra £500m for the household support fund, which is
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