The government will extend the energy price guarantee for a further three months, the Treasury has confirmed.
It comes ahead of today's full budget, where Chancellor Jeremy Hunt will lay out the country's economic forecast for the coming year. Announcements on childcare reform, benefits reform and pensions allowances are all expected to form part of the Budget when Mr Hunt addresses MPs later today.
The guarantee - which ensures average annual household bills are capped at £2,500 - had been due to rise to £3,000 in April. This morning's announcement means the current cap will stay in place until mid-June, which the government says will save a typical household around £160.
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Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.
“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”
Support of £400 that was available to households over the winter in monthly instalments is still due to end on April 1. But Mr Hunt - who had previously said the price guarantee would have to rise - performed a U-turn following pressure from charities and campaigners.
Mr Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level.
“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.”
Childcare reform is also expected to form a large part of the chancellor's package, with reports of a multibillion-pound expansion of free childcare for one and two-year-olds receiving a tentative welcome yesterday, as parents and nurseries awaited the full details. The plan is believed to include 30 hours a week of childcare for parents in England with one and two-year-olds, building significantly on the current provision.
Mr Hunt is expected this afternoon to reference the 'difficult decisions' taken last November to stabilise the markets, following the short-lived premiership of Liz Truss, as he pitches a plan the Government hopes can deliver 'sustainable' growth.
Sluggish UK growth has dominated political and economic debate in recent months, while the challenge of inflation and widespread industrial disputes over public sector pay have not gone away. But Mr Hunt is expected to promise a growth plan that will remove 'the obstacles that stop businesses investing' while also “tackling the labour shortages that stop them recruiting” and 'breaking down the barriers that stop people working'.
At the centre of that plan will be a range of measures designed to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into the workplace, with the Chancellor specifically set to announce the axing of the system used to assess eligibility for sickness benefits, paying parents on universal credit childcare support upfront and increasing the amount they can claim by several hundred pounds.
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Changes to pensions are also expected, with the Chancellor likely to allow workers to put more money into their pension pot before being taxed by lifting the lifetime pension allowance.
Action is also expected on prepayment meters with the Chancellor set to use the Budget to scrap so-called “prepayment premium” from July.
But Labour has said that Mr Hunt’s Budget speech is an opportunity for the Government to show some 'real ambition' after years of 'managed decline'.
Shadow chancellor Rachel Reeves said: “This Budget is an opportunity for the Government to get us off their path of managed decline.
“It’s a chance for them to recognise the huge promise and potential of Britain and get us growing again. With 13 years of economic mismanagement and sticking plaster politics leaving us lagging behind, what we need to see on Wednesday is some real ambition from the Government.
“Labour’s focus would be on our mission to secure the highest growth in the G7. Our plan will help us lead the pack again, by creating good jobs and productivity growth across every part of our country, so everyone, not just a few feel better off.”
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