When your energy bill could start going down, according to experts

Soaring energy prices have put UK households under a tremendous amount of pressure, but some experts have indicated there is promising news on the horizon.

The Resolution Foundation has said typical annual energy bills are now forecast to be around £2,400 for 2023-24 - significantly lower than the £3,000 predicted at the time of the autumn budget - providing a glimmer of hope to struggling families.

However, the year ahead will still feel difficult, as the first thing households will notice in April is a rise in their heating and electricity payments as government support is reduced.

The Energy Price Guarantee (EPG) - which is set to protect consumers from price hikes - will be raised by £500 to £3,000, meaning average bills will be around 20% (or £400) higher than last year.

Moreover, falling gas prices are not a panacea for families, who are already struggling with a cost of living crisis affecting many other everyday essentials, including food and broadband.

Energy bills support

After a challenging and unsettling few months in the autumn of 2022 - filled with headlines of sky-high inflation and economic chaos sparked by Liz Truss' brief stint as prime minister - the latest forecast will provide some relief.

Experts at the Resolution Foundation think-tank suggest that average energy bills are to drop to a lower-than-expected £2,400 in the coming financial year.

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But the benefit will not be felt right away due to government policies put in place to manage the energy crisis.

The increase in the EPG from £2500 to £3,000 in April for a typical household means bills will initially rise by around 20% before falling back to just above £2,200 in October.

This is because the government is scaling back its support, and is focusing more on helping more vulnerable households. Universal support with bills will be down by nearly 90% next year, the Resolution Foundation says.

This, combined with slightly higher cost of living payments, means the poorest fifth of households will receive six times as much support with energy bills than the richest fifth (£840 vs £140).

On the whole, however, total energy-related support for the poorest fifth is still down 60% on this year as the government takes a step back to cut its spending.

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The scale of inflation endured by the country is put into perspective by the fact that average bills in 2023-24 are still forecast to cost twice as much as they did in 2019-20, which were just £1,200.

Britons have been falling behind on their bills as a result, with 10% of people missing at least one payment of a priority bill in the three months to November 2022, according to the Resolution Foundation.

This figure rises to a quarter for workers in poorer households, who are bearing the brunt of widening income inequality.

While it will take some time for households to feel better off, the overall outlook is still more positive than expected just a few months ago.

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Economist at the Resolution Foundation, Emily Fry, said: “Falling wholesale gas prices have been the big economic good news story of the year so far. This will bring real benefits to families, even if it might not feel like it for some time to come.

“While energy bills are still set to rise next year by another £400, we’re not on course to see the sustained £3,000 annual bills many feared.

"The estimated cost of the EPG next year is also due to fall by almost 90 per cent. This will give the Chancellor a big windfall in his upcoming Budget, partially offset by lower windfall tax revenues.

“The cost of living crisis is far from over, but falling gas prices mean that it’s looking less bleak than just a few months ago.”

On Tuesday, Rishi Sunak created a new department for energy security, saying: “I think we’ve seen over the last year in particular the impact that happens to people’s bills at home when energy policy doesn’t work properly, when we’re reliant on imported energy from hostile countries.

“That’s why the creation today of a new department focused specifically on energy security and net zero is so important.”