The decision by Jeremy Hunt not to amend the energy price guarantee between now and April next year is incredibly welcome” according to Carl Emmerson, deputy director of the Institute of Fiscal Studies (IFS).
Speaking to Sky News, Mr Emmerson said when the government first announced the energy price guarantee he was “sympathetic” to the idea that the policy might be needed for this winter, but “it always looked rather odd” that the country was committing to it for two years.
Mr Emmerson said: “I’m very pleased to see that the government is now taking an approach saying, well, yes, this big scheme will be in place this winter. We can’t do better than that in the short run.
“But it’s now reopening the idea that we can design something that will be cheaper for the taxpayer, hopefully, targeted towards those who really need it, but also preserves incentives that people have to cut back on their energy use for the following winter.”
Mr Emmerson went on to say the chancellor’s medium-term fiscal plan was a “very big tax rising announcement”.
“A week ago it looked very difficult. We were talking about how would you do this without any tax rises because that was clearly a steer from Liz Truss and the then chancellor,” he said.
“And it looked like you’d have to make some incredibly difficult decisions around working age, welfare, capital spending, and around day-to-day spending on public services.
“Now, there may well still be a need to squeeze spending, given the chancellor’s tax announcement today.
“We’re not necessarily going to be not paying for public services going forward, but it might be the kind of more credible, more deliverable end of the scale rather than what we were looking at just a few days earlier.”