Budget 2023: Energy price cap extended, government confirms, ahead of Jeremy Hunt’s first budget
The government has announced it will keep its cap on energy prices for a further three months as part of Jeremy Hunt’s first full budget.
The Energy Price Guarantee (EPG) – which limits the unit cost of gas and electricity that people pay – had been expected to rise to £3,000 next month, meaning another hike in household bills.
But just hours before the chancellor was due to deliver his statement to Parliament, the Treasury confirmed the figure would now remain at £2,500 until June, claiming the typical home would save £160 on energy bills as a result.
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Hunt extends energy price cap as budget measures revealed early
Prime Minister Rishi Sunak said the decision, which will cost £3bn, would “give people some peace of mind”.
Mr Hunt added: “With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
However, the energy bills support scheme, which saw households getting around £66 taken off their bills each month, will still come to an end in March.
Labour’s shadow chief secretary to the Treasury, Pat McFadden, welcomed the announcement, saying his party had been calling for it for some time.
“I don’t mind if we lead the way as long as they do the right thing,” he told Sky News. “And I think it’s important to do that because the cost of living crisis has not gone away.
“People are really struggling to pay their bills and as things stood, those bills were scheduled to go up another £500 a year in a couple of weeks time, so I think it’s right to extend that guarantee.”
Read more:
What to look out for in Hunt’s first budget
But the SNP’s economy spokesman, Stewart Hosie, said the policies did not go far enough, calling the chancellor “truly pathetic” for not keeping the energy bills support scheme.
“With energy companies making record profits, and the wholesale price of gas falling, there is no excuse for this shameful Tory decision, which will hammer household incomes and push even more families into poverty, hardship and debt,” he added.
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Chair of the Treasury select committee, Harriett Baldwin, says the chancellor will be able to give “some generous measures” to the British public.
The move is the latest early reveal from Mr Hunt’s budget, with the chancellor expected to reveal his plans in full from 12.30pm – after Prime Minister’s Questions.
Sky News also understands he will promise to provide 30 hours of childcare a week to parents of one and two-year-olds – at a cost of £4bn for the Treasury – and give a further cash injection to the sector to increase the availability of existing free childcare for three to four-year-olds.
Plans are also being considered to loosen staff-to-child ratios for two-year-olds, which could make the cost of childcare a little cheaper – though some in the sector have warned against it, saying it could undermine the quality of care.
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Childcare funding is “good news” for parents, says former Tory minister Justine Greening.
The policies fit into what is expected to be the wider theme of the budget – encouraging people back to work.
In that vein, Mr Hunt is expected to raise the lifetime allowance for pension savings from £1m to £1.8m – a record level – and could also lift the annual tax-free allowance for pensions from £40,000 to £60,000 to incentivise professionals out of retirement.
There could also be changes to aid long-term sick, disabled people and benefit claimants to return to work.
But there could be upset from some of his own backbenchers as the chancellor is not expected to meet Tory demands for tax cuts, and will keep the planned rise in corporation tax from 19p to 25p.
However, former Conservative chancellor Lord Lamont warned against a rebellion, saying Mr Hunt had “done a good job” to “restore confidence” in the economy after Liz Truss’ disastrous mini-budget last year that sent the markets into turmoil.
He told Sky News: “I think it’s very important that that is not disturbed by people being unhappy about not tax cuts today.
“I don’t think there are going to be tax cuts today. I don’t think there should be tax cuts today. I don’t think you’re going to tax cuts when you have 10% inflation.
“You only deal with inflation by slowing in a controlled way. The economy dies. So it’s not the day or the time for tax cuts.”
During his speech, Mr Hunt is expected to reference the “difficult decisions” taken to stabilise the markets following the so-called mini-budget – the event that saw him brought in to reverse policies and calm the markets.
“Today, we deliver the next part of our plan: a budget for growth,” Mr Hunt will say.
“Not just growth from emerging out of a downturn. But long-term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people… all whilst making our country one of the most prosperous in the world.”
World
US defence secretary signals dramatic shift in American military policy away from Europe, warning allies about ‘stark strategic realities’
US troops will not be used to secure the peace in Ukraine following any ceasefire deal with Vladimir Putin, Donald Trump’s new defence secretary has declared, as he signalled a dramatic shift in American foreign and defence policy away from Europe.
Pete Hegseth also said it is “unrealistic” to think Ukraine can return to its pre-2014 borders and he ruled out NATO membership as way to guarantee Kyiv’s security.
This will be a huge blow for Volodymyr Zelenskyy.
The interventions came at the opening of a meeting of allies in Brussels on Wednesday.
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Defence secretaries Pete Hegseth and John Healey meeting in Brussels.
Pic: Reuters/Johanna Geron/Pool
Mr Hegseth said Washington must focus on the threat posed by China and securing its own borders.
He added: “Stark strategic realities prevent the United States of America from being primarily focused on the security of Europe.
“As the United States shifts its attention to these threats, European allies must lead from the front,” Mr Hegseth said in opening remarks at the gathering of NATO and non-NATO countries that are providing military support to Ukraine.
NATO spending
Mr Trump – a long-time critic of the alliance, which he sees as containing freeloaders that benefit from American military strength without investing in their own security – has said all NATO allies should increase defence spending to 5% of GDP.
This is more than double the current target. The UK is only spending 2.3%.
While still supportive of NATO, Mr Hegseth warned that America’s patience was limited.
“Our transatlantic alliance has endured for decades. And we fully expect it will sustained for generations more. But this won’t just happen,” he said.
He continued: “It will require our European allies to step into the arena and take ownership of conventional security on this continent.
“The United States remains committed to the NATO alliance and to the defence partnership with Europe.
“Our relationship will prioritise empowering Europe to own responsibility for its security.”
Ukraine-Russia war
Mr Hegseth also had strong words about Russia’s war in Ukraine, which he said “must end”.
Speaking frankly, he dismissed a fundamental Ukrainian goal to recapture all its territory – including Crimea and swathes of the Donbas that were seized by Russia in 2014 when Mr Putin first invaded his neighbour. This aim had previously been backed by the UK and other allies.
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“We want… a sovereign and prosperous Ukraine. But we must start by recognising that returning to Ukraine’s pre-2014 borders is an unrealistic objective,” he said.
“Chasing this illusory goal will only prolong the war and cause more suffering.”
The US defence secretary said that a durable peace must include robust security guarantees to ensure that the war won’t begin again – but he made clear that the US would not be part of that effort on the ground and it could not be a NATO operation.
It was not immediately clear, however, whether the US military may help to provide protection from a distance.
“These security guarantees should not be provided through NATO membership, but must instead be backed by capable European and non-European troops,” the US defence secretary said.
“If these troops are deployed as peacekeepers to Ukraine at any point, they should be deployed as part of a non-NATO mission and not covered under Article 5. There also must be robust international oversight of the line of contact.”
Pete Hegseth stands with German defence minister Boris Pistorius.
Pic: Reuters/Johanna Geron/Pool
Article 5 of NATO says an armed attack on one member is considered an attack on all.
Read more: What is Article 5?
Mr Hegseth continued: “To be clear, as part of any security guarantee, there will not be US troops deployed to Ukraine.”
His words will be a significant setback for Kyiv.
President Zelenskyy told Sky News last week that any peacekeeping force that did not include a US element would be a “major mistake”, signalling that he did not believe European militaries alone could deter Moscow.
The retreat of the US from its leadership role in Ukraine was clear in the choreography of the Ukraine Defence Contact Group meeting – an alignment of allies gathered together by Washington under Joe Biden and his defence secretary Loyd Austin after Russia launched its full-scale invasion almost exactly three years ago.
Future of European security
The regular meetings have until now always been chaired by the US.
Wednesday’s meeting, however, was led by John Healey, the UK defence secretary.
Mr Hegseth made clear that European allies would need to step up and take on much more of the effort to provide Ukraine with weapons and non-military support.
“Safeguarding European security is an imperative for European members of NATO. As part of this, Europe must provide the overwhelming share of future lethal and nonlethal aid to Ukraine,” he said.
This means donating more ammunition, expanding Europe’s defence industrial base and rallying the public to be willing to respond to the threat the continent faces.
“Part of this is speaking frankly with your people about how this threat can only be met by spending more on defence and investing strategically,” Mr Hegseth said.
“Increasing your commitment to your own security is a down payment for the future.”
Earlier, NATO Secretary General Mark Rutte said he agreed with US president Donald Trump on the need for Washington and European allies to share the burden of military aid for Ukraine more equally.
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