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Energy bills could hit £4,000 after Jeremy Hunt U-turns on support

UK households face rocketing energy bills as the government plans to withdraw support from April 2023. Photo: Getty
UK households face rocketing energy bills as the government plans to withdraw support from April 2023. Photo: Getty (coldsnowstorm via Getty Images)

The Resolution Foundation (RF) warned that middle-income families may be unable to pay energy bills next year as bills could hit £4,000 after the government's support package U-turn.

The thinktank also said that the spending cuts announced by chancellor Jeremy Hunt on Monday could be as deep as those after the financial crisis in 2009.

Chief executive Torsten Bell told BBC Radio Four’s Today programme there was a fiscal black hole of around £30bn even after the government scrapped nearly all of its mini-budget.

"These are big numbers. If we are talking of spending cuts between £30-40bn then they’re not that far off the scale of the cuts announced by George Osborne back in 2010," he said.

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Read more: Jeremy Hunt bins disastrous mini-budget and announces changes to energy bill support

On the scaling down of energy support, Bell said: "It’s a big deal, if he (chancellor Jeremy Hunt) did scrap all of that he’s saving up to £40bn, but it’s a big deal for households too because our bills are due to hit £4,000 in April.

"I think really £4,000 is so large that even middle-income households won’t be able to afford those bills next year.

"So he’s done the easy bit, scrapping the existing scheme, what he’s got to do is some hard work about how he intends to provide support for lower and middle-income households next year."

Moneysaving expert Martin Lewis warned the energy price cap will jump 73% if the Ofgem system returns in April when the government's price guarantee ends.

Meanwhile, Labour shadow chancellor Rachel Reeves has urged Hunt to "get on with" extending a windfall tax on the profits of oil and gas companies.

The MP told Sky News: "I’ve been saying for months and months that the government should expand the windfall tax.

"But what the government keep doing is borrowing more money, adding to the national debt, and failing to support families and pensioners in the way that is absolutely needed in a cost-of-living crisis.

"Many of us are sick and tired of words; what we need is action to help people with the cost-of-living crisis, to restore economic and financial stability and also a real plan to grow the economy."

Read more: Ofgem to launch campaign telling people how to save money on energy bills

It comes as Hunt on Monday backtracked on almost all the tax cuts announced in the mini-budget, ripping apart Truss's £43bn tax-cutting agenda.

He announced the government will scrap plans to reduce the basic rate of income tax from 20% to 19% in April next year, while help with energy bills for households will only last until April, and ditched plans for new VAT-free shopping for international tourists.

The major U-turns will raise £32bn annually, with all tax cuts announced in the mini-budget now been reversed apart from a £13bn cut to national insurance and £1.5bn in stamp duty changes.

Prime minister Liz Truss has already rowed back on other key pledges as the government's tax flip-flopping caused market turmoil.

She announced that corporation tax would in fact rise to 25% from April next year, and scrapped plans to abolish the 45p tax rate for the highest earners earlier this month.

Watch: Why are gas prices rising?