Centre for Energy Policy (CEP) response to the Autumn Statement 2022
Chancellor acts to mitigate worse impacts of continuing energy price crisis but difficult decisions still need to be made
The Chancellor’s Autumn Statement 2022 announced some key measures including on the Energy Price Guarantee, the Energy Bill Relief Scheme, the Energy Profits Levy and the introduction of a new windfall tax on electricity generators.
In response, Professor Karen Turner, Director at the Centre for Energy Policy said:
“Today’s Autumn Statement does deliver something of a sigh of relief in terms of preventing the impacts of the ongoing energy crisis getting a whole lot worse, but this is mixed with a sigh of frustration as much of what is urgently needed remains much further down the line.
“The continuation of the Energy Price Guarantee is crucially important in terms of helping control inflation and giving certainty and confidence to households. However, it won’t improve household budgets on where they are now, given the impact of rising taxes and falling real take-home wages on incomes, combined with what will still be an increase in energy bills. We do, however, welcome the additional support to lower income household via energy and other payments, and confirmation that benefits will rise by 10.1% along with pensions.
“We are eager to see the detail on further support for businesses. This is crucial in fighting inflation and the broader cost-of-living, where households don’t only feel impacts through their own energy bills, but through the price of everything they buy, and where risk to businesses also bring risks to jobs and therefore household incomes.
“The extension of windfall taxes on excess profits announced today on oil and gas companies and now on electricity generators will contribute to helping to pay the bill for the continued support for households and businesses. However, the core problem is that there is still a need for regulatory reform so that extraordinary profit making is avoided through how prices are determined in the first place, which requires more competitive and efficient markets. The energy supply challenge is also one of increasing domestic low carbon electricity production, but the only new investment in this regard confirmed in the statement is delivering more nuclear capacity through Sizewell C.
“We welcome the announcement on intended large-scale support of energy efficiency, and the setting of this in the context of delivering growth. Our research has consistently shown that energy efficiency is a key source of sustained economic growth that involves increased real household incomes alongside lower energy bill. Increased energy efficiency on the business side of the economy is also key for competitiveness and productivity. However, it is disappointing that government support for energy efficiency activity is not due to start until 2025 (after the next general election), too late to help with the current energy crisis, where people are having to focus on conserving energy through reduced use of heating, lighting, cooking and transport services.”