The reduction in the Ofgem price cap that will apply from April may be the final step on the long, ruinously expensive road to a new normal for consumer energy prices.
The guide price for typical annual dual-tariff use of £1,690 – a fall of 12.3% from the previous cap – is a dramatic reduction from the peak of more than £4,000 that applied just a year ago and prompted multi-billion pound state support for every household in the country.
After bouncing between £1,800 and just shy of £2,000 in the three quarters since last June, this reduction, taken with projections of a further drop to around £1,500 in three months, could represent the floor for post-Ukraine invasion prices.
To be clear, a price that’s still considerably higher than the £993 we expected to pay in the winter of 2020-21 represents a dramatic, material and permanent increase in the cost of living, and a return to that level is unlikely as long as Russia is a global pariah at war.
Energy markets may look becalmed but volatility is in their nature.
A warm, wet winter helped UK domestic gas demand fall 16% in 2023 compared to the pre-war average, but the weather has flattered UK energy security.
Much of the flow of gas from Russia has been replaced by liquid natural gas from Australia, the US and Qatar, and pipelines from Norway, all ostensibly friendlier nations, but the UK remains exposed to the kindness of strangers to heat homes and fire power stations.
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The long-term answer is low-carbon and renewable energy sources, but while Vladimir Putin has provided the clearest motivation yet to accelerate, the transition has become significantly more expensive than anticipated.
The offshore wind industry in particular has had a brutal year with supply chain resources finite and finance, like power, no longer cheap.
For consumers, however, this lull may signal the return of a functioning competitive market among suppliers.
Since Russian tanks rolled into Ukraine the Ofgem figure has been a cap in name only.
In practice, it’s been a universally applied maximum charge, with the taxpayer picking up the balance of every pound over £2,500.
Lower wholesale prices, helped by the caprice of a mild winter, mean suppliers may have to work a little harder for your custom.
British Gas is already offering a fixed price guaranteed at £1 below the April price cap, while E.On is offering a 3% discount on the cap for a year.
Not much compared to the wild (and entirely unsustainable market) that existed before the war, but it is a start.
More than billpayers welcoming the fall
The reduction will be welcome at the Treasury too. Having set the precedent of paying our energy bills and allowing the national debt to balloon close to 100% of GDP in the process, there is no appetite to return to feeding the national meter.
With the cap now around half the more than £3,100 that applied in April last year there will be downward pressure on inflation too, though don’t expect the Bank of England to rush to cut rates as a consequence.
The biggest annual reduction in bills was factored into the figures for last October, helping drag CPI down from its 11% peak, and the Bank of England is already looking ahead to when the gravitational pull of energy prices falls out of the figures and secondary factors start to drive the headline rate.
There may also now be space for Ofgem and ministers, election permitting, to examine some of the remaining obvious flaws in the domestic market.
Electricity remains almost four times more expensive per unit than gas thanks to green taxes, despite gas being the fuel we need to remove from the network if net zero and energy security are genuine goals.
If the government is serious about incentivising the decarbonisation of home heating with heat pumps – an open question – these running costs will have to be addressed alongside installation grants.
And standing charges remain a regressive charge for billpayers, with electricity costing more than £3.50 a week before you have turned a light on, though the new cap makes that a slightly less terrifying prospect than a year ago.
While the politicians talk, so many people come from around the world to try to get across the Channel on small boats. But why?
Why make such a perilous crossing to try to get to a country that seems to be getting increasingly hostile to asylum seekers?
As the British and French leaders meet, with small boats at the forefront of their agenda, we came to northern France to get some answers.
It is not a new question, but it is peppered with fresh relevance.
Over the course of a morning spent around a migrant camp in Dunkirk, we meet migrantsfrom Gaza, Iraq, Eritrea, South Sudan, Sri Lanka and beyond.
Some are fearful, waving us away; some are happy to talk. Very few are comfortable to be filmed.
All but one man – who says he’s come to the wrong place and actually wants to claim asylum in Paris – are intent on reaching Britain.
They see the calm seas, feel the light winds – perfect conditions for small boat crossings.
John has come here from South Sudan. He tells me he’s now 18 years old. He left his war-torn home nation just before his 16th birthday. He feels that reaching Britain is his destiny.
“England is my dream country,” he says. “It has been my dream since I was at school. It’s the country that colonised us and when I get there, I will feel like I am home.
“In England, they can give me an opportunity to succeed or to do whatever I need to do in my life. I feel like I am an English child, who was born in Africa.”
Image: ‘England is my dream country,’ John tells Adam Parsons
He says he would like to make a career in England, either as a journalist or in human resources, and, like many others we meet, is at pains to insist he will work hard.
The boat crossing is waved away as little more than an inconvenience – a trifle compared with the previous hardships of his journey towards Britain.
We meet a group of men who have all travelled from Gaza, intent on starting new lives in Britain and then bringing their families over to join them.
One man, who left Gaza two years ago, tells me that his son has since been shot in the leg “but there is no hospital for him to go to”.
Next to him, a man called Abdullah says he entered Europe through Greece and stayed there for months on end, but was told the Greek authorities would never allow him to bring over his family.
Britain, he thinks, will be more accommodating. “Gaza is being destroyed – we need help,” he says.
Image: Abdullah says ‘Gaza is being destroyed – we need help’
A man from Eritreatells us he is escaping a failing country and has friends in Britain – he plans to become a bicycle courier in either London or Manchester.
He can’t stay in France, he says, because he doesn’t speak French. The English language is presented as a huge draw for many of the people we talk to, just as it had been during similar conversations over the course of many years.
I ask many of these people why they don’t want to stay in France, or another safe European country.
Some repeat that they cannot speak the language and feel ostracised. Another says that he tried, and failed, to get a residency permit in both France and Belgium.
But this is also, clearly, a flawed survey. Last year, five times as many people sought asylum in France as in Britain.
And French critics have long insisted that Britain, a country without a European-style ID card system, makes itself attractive to migrants who can “disappear”.
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Migrant Channel crossings hit new record
A young man from Iraq, with absolutely perfect English, comes for a chat. He oozes confidence and a certain amount of mischief.
It has taken him only seven days to get from Iraq to Dunkirk; when I ask how he has made the trip so quickly, he shrugs. “Money talks”.
He looks around him. “Let me tell you – all of these people you see around you will be getting to Britain and the first job they get will be in the black market, so they won’t be paying any tax.
“Back in the day in Britain, they used to welcome immigrants very well, but these days I don’t think they want to, because there’s too many of them coming by boat. Every day it’s about seven or 800 people. That’s too many people.”
“But,” I ask, “if those people are a problem – then what makes you different? Aren’t you a problem too?”
He shakes his head emphatically. “I know that I’m a very good guy. And I won’t be a problem. I’ll only stay in Britain for a few years and then I’ll leave again.”
A man from Sri Lanka says he “will feel safe” when he gets to Britain; a tall, smiling man from Ethiopia echoes the sentiment: “We are not safe in our home country so we have come all this way,” he says. “We want to work, to be part of Britain.”
Emmanuel is another from South Sudan – thoughtful and eloquent. He left his country five years ago – “at the start of COVID” – and has not seen his children in all that time. His aim is to start a new life in Britain, and then to bring his family to join him.
He is a trained electrical engineer, but says he could also work as a lorry driver. He is adamant that Britain has a responsibility to the people of its former colony.
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Emmanuel Macron has said the UK and France have a “shared responsibility” to tackle the “burden” of illegal migration, as he urged co-operation between London and Paris ahead of a crunch summit later this week.
Addressing parliament in the Palace of Westminster on Tuesday, the French president said the UK-France summit would bring “cooperation and tangible results” regarding the small boats crisis in the Channel.
Image: King Charles III at the State Banquet for President of France Emmanuel Macron. Pic: PA
Mr Macron – who is the first European leader to make a state visit to the UK since Brexit – told the audience that while migrants’ “hope for a better life elsewhere is legitimate”, “we cannot allow our countries’ rules for taking in people to be flouted and criminal networks to cynically exploit the hopes of so many individuals with so little respect for human life”.
“France and the UK have a shared responsibility to address irregular migration with humanity, solidarity and fairness,” he added.
Looking ahead to the UK-France summit on Thursday, he promised the “best ever cooperation” between France and the UK “to fix today what is a burden for our two countries”.
Sir Keir Starmer will hope to reach a deal with his French counterpart on a “one in, one out” migrant returns deal at the key summit on Thursday.
King Charles also addressed the delegations at a state banquet in Windsor Castle on Tuesday evening, saying the summit would “deepen our alliance and broaden our partnerships still further”.
Image: King Charles speaking at state banquet welcoming Macron.
Sitting next to President Macron, the monarch said: “Our armed forces will cooperate even more closely across the world, including to support Ukraine as we join together in leading a coalition of the willing in defence of liberty and freedom from oppression. In other words, in defence of our shared values.”
In April, British officials confirmed a pilot scheme was being considered to deport migrants who cross the English Channel in exchange for the UK accepting asylum seekers in France with legitimate claims.
The two countries have engaged in talks about a one-for-one swap, enabling undocumented asylum seekers who have reached the UK by small boat to be returned to France.
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Britain would then receive migrants from France who would have a right to be in the UK, like those who already have family settled here.
The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.
Image: President Macron greets Commons Speaker Sir Lindsay Hoyle at his address to parliament in Westminster.
Elsewhere in his speech, the French president addressed Brexit, and said the UK could not “stay on the sidelines” despite its departure from the European Union.
He said European countries had to break away from economic dependence on the US and China.
“Our two countries are among the oldest sovereign nations in Europe, and sovereignty means a lot to both of us, and everything I referred to was about sovereignty, deciding for ourselves, choosing our technologies, our economy, deciding our diplomacy, and deciding the content we want to share and the ideas we want to share, and the controversies we want to share.
“Even though it is not part of the European Union, the United Kingdom cannot stay on the sidelines because defence and security, competitiveness, democracy – the very core of our identity – are connected across Europe as a continent.”
The Princess of Wales and celebrities attended the King’s star-studded state banquet on Tuesday, where Emmanuel Macron paid tribute to the late Queen Elizabeth II.
On the first day of Mr Macron’s state visit, King Charles gave a toast in French and said the three-day trip was another chance to “celebrate a deep and enduring friendship”.
“What’s possibly the most remarkable thing is the way in which the speciality of one country is part of the story of the other,” the monarch said.
“For centuries, our citizens have admired one another. We’ve made each other laugh, and we’ve imitated one another.”
Image: The Prince and Princess of Wales at the State Banquet. Pic: PA
Image: The banquet hall at Windsor Castle. Pic: PA
Image: The King makes a speech at a banquet at Windsor Castle. Pic: PA
Image: King Charles looks at Emmanuel Macron at a state banquet at Windsor Castle. Pic: PA
After the King’s speech, Mr Macron told him France had a “real affection for your mother” Queen Elizabeth II, adding he believed the feeling was “reciprocal”.
“She was your queen,” he said. “To us, she was the Queen.”
He capped off his speech – which repeated his calls for closer relations that he made earlier in the Palace of Westminster – by saying: “In honour of the United Kingdom, of this entente amico that unites our two fraternal peoples in an unwavering alliance.
“Long live the United Kingdom of Great Britain and Northern Ireland! Long live France!”
Image: Emmanuel Macron gives a speech at a state banquet at Windsor Castle. Pic: PA
The Princess of Wales also made her first appearance at a state banquet in almost two years, sitting next to the French president.
Image: Emmanuel Macron and Kate, the Princess of Wales, share a toast. Pic: PA
Also in attendance were Sir Mick Jagger, frontman of The Rolling Stones, who was joined by his fiancee Melanie Hamrick, and Sir Elton John, who was accompanied by his husband David Furnish.
Image: Mick Jagger taking his seat at the state banquet at Windsor Castle. Pic: PA
Image: Elton John and David Furnish at the state banquet at Windsor Castle. Pic: PA
Meanwhile, it was announced that the Bayeux Tapestry, depicting the Norman conquest of England, will return to the UK for the first time in more than 900 years, and will feature in an exhibition from September 2026 to July 2027.
Mr Macron joked ahead of the state banquet that negotiations to bring the 11th-century artwork back to the UK took longer “than all the Brexit tests”. Talks on a loan had started as early as 2018.