Written statement on Energy Prices Act 2022 and Expenditure on Energy Schemes – Q2 and Q3 2023 - Apr 22

Secretary of State for Energy Security and Net Zero (Claire Coutinhon): I am tabling this statement to update Hon. Members under the Energy Prices Act 2022, in line with the requirement under the Act for quarterly reporting to Parliament on expenditure incurred under it.

This is the third report on energy scheme expenditure under section 14 of the Act and covers the quarters from 1 April to 30 June 2023 and 1 July to 30 September 2023.

Energy prices are volatile, and changes will affect the outturn cost of the schemes. The Government has prioritised support for those most in need, whilst ensuring we act in a fiscally responsible way.

Since Putin's illegal invasion of Ukraine caused energy bills to rise, the government has stepped in with more than £40bn of financial support. Over £43 billion was spent between October 2022 and September 2023, the most ever provided to subsidise household bills in UK history. This was in part funded through taxing energy producers' excess profits - with the government's windfall tax on producers expected to raise over £26 billion by March 2029.[1]

Government support schemes covered nearly half of household energy bills between October 2022 and June 2023, saving households £1,500 on average.[2]

Expenditure incurred

Future costs

Forecasts of FY23-24 (1 April 2023 – 31 March 2024) expenditure for the energy schemes were published by the Office for Budget Responsibility on 22^nd November 2023 as part of the Autumn Statement 2023. The forecasts provided were: £4.3bn for the Energy Price Guarantee, including Prepayment Meter Levelisation, and £0.6bn for Non-Domestic energy support, including Energy Bills Relief Scheme, Energy Bills Discount Scheme and Energy Bills Discount Scheme heat network support.

The costs in FY23-24 for other energy support schemes are expected to be net cash returns from suppliers and Local Authorities. This includes the Energy Bills Support Scheme, Energy Bills Support Scheme Alternative Funding, the Domestic Alternative Fuel Payment, and the Non-Domestic Alternative Fuel Payment.

Separately, the forecast for Heat Networks Alternative Dispute Resolution bodies funding is £0.2m.

All forecasts are provided on an accruals basis. Ongoing work on the reconciliation of scheme costs may impact FY23-24 and FY24-25 forecasts.

To note:

1. Figures for expenditure incurred are on a cash basis. This includes payments made by the Department for Energy Security and Net Zero to energy suppliers, Local Authorities and other scheme operators.
2. Where the Department has received net cash back from energy suppliers or Local Authorities as part of the reconciliation of energy schemes, this is shown by a negative cash figure.
3. Some expenditure incurred in FY23-24 may relate to FY22-23. Therefore, forecasts for FY23-24 may be lower than expenditure incurred in FY23-24.
4. The Energy Bills Support Scheme in Great Britain was not made under the powers conferred by the Energy Prices Act 2022, but it is included for completeness.
5. Heat Networks Alternative Dispute Resolution bodies funding utilises the power conferred by section 13 of the Energy Prices Act 2022. This funding is separate to the Energy Bills Discount Scheme heat network support.
6. Administrative costs are not included in figures.

[1] DESNZ, Press Release, 8 June 2023

[2] Hansard, 13 November 2023, link