Everyone should reduce their energy use in times of crisis, says UK Chancellor

Everyone should reduce their energy use in times of crisis, says UK Chancellor
Everyone should reduce their energy use in times of crisis, says UK Chancellor

UK Chancellor Jeremy Hunt has urged people to reduce their energy consumption so that Britain is not susceptible to disruptions in international energy supplies.

Speaking to the House of Commons Treasury Committee on November 23, Hunt warned that people will have to “take responsibility for their energy bills” and reduce their consumption, otherwise there will be “a huge additional burden on taxpayers”.

The government is set to spend billions of pounds on its Energy Support Scheme, which shields households and businesses from sky-high energy prices by capping average costs.

Hunt told the committee: “What we can do is say we’re going to help you this year with the £2,500 ($2,960) cap, we’re going to help you next year with the 3 cap. £500 ($3,500), we’ll help you save the energy you use and for those most in need we’ll try to find a more efficient structure.

“But we tell people that ultimately everyone will have to take responsibility for their energy bill and they will have to think about how they are going to reduce their energy consumption.

“Because it’s a national mission to make sure we can’t be blackmailed by people like [Russian President Vladimir] Putin when they do things that interrupt the international energy supply.

Energy support

Average annual household energy has been frozen at £2,500 from October 1 under the energy price guarantee introduced by former Prime Minister Liz Truss.

The cap, limiting the price companies can charge customers per unit of energy they use, was to last for two years from October 1. But after Hunt replaced Kwasi Kwarteng as chancellor, he announced he would end at his current level after six years. months, after which more targeted assistance would be provided to the most vulnerable.

In its autumn budget, unveiled on November 17, it announced that the energy price guarantee will continue for a further 12 months from April, but will increase from the current £2,500 to £3,000 a year for the average household.

Hunt told MPs the program would cost £80bn ($97bn) this year and “maybe around half that next year”.

“In the long run, we’re going to need everyone to help us solve this problem if we’re not going to impose a huge additional burden on taxpayers, which will ultimately lead to the kind of high taxes that I certainly don’t believe are desirable. in the long run,” he said.

“So we try to help people help themselves. We give them a cushion this year and next. But we need people to change their behavior.

He added: “We will always be there to help the poorest households, our way of doing things will change. But for most people, we need you to play your part in reducing our energy dependence on whatever Putin chooses to do in Ukraine, which is why we have this national ambition to reduce consumption energy by 15%”.

Government borrowing

According to the Office for National Statistics (ONS) on November 22, UK government borrowing reached £13.5 billion ($16 billion) in October.

The figure was £4.4 billion ($5.2 billion) higher than the same month last year and was the fourth highest figure for October since monthly records began in 1993, a said the ONS.

The higher borrowing figure was partly due to energy support schemes, which pushed central government current spending to £76.8bn ($91bn), or £6.5bn pounds ($7.7 billion) more than the same month last year.

Central government tax revenue for October was £51.7bn ($61.3bn), £2.5bn ($2.96bn) more than there is a year.

The government has also felt the impact of continued increases in interest payments paid by the state on its debt, after a series of interest hikes by the Bank of England and hikes in inflation.

In October, interest payable on central government debt reached £6.1bn ($7.2bn), of which £3.3bn ($3.9bn) came from the payment debt interest.

“Untargeted” assistance

According to the latest forecasts from the Organization for Economic Co-operation and Development (OECD), the UK economy will contract more than any other G-7 country next year.

The OECD expects the UK economy to contract 0.4% in 2023 and grow just 0.2% in 2024.

The UK is also the third worst performer of all G-20 countries globally, with only Russia and Sweden recording larger declines in GDP, at 5.6% and 0.6%.

The OECD blamed the expected slowdown in part on the UK government’s energy support package, saying it will drive up inflation, forcing policymakers to raise interest rates further as they try to rein in rising prices. prices and wages.

On Britain’s outlook, the OECD warned: “Risks to the outlook are substantial and tilted to the downside. Higher-than-expected goods and energy prices could weigh on consumption and further dampen growth.

“A prolonged period of acute labor shortages could force businesses into a more permanent reduction in operating capacity or further worsen wage inflation.”

PA Media contributed to this report.

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