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Jeremy Hunt has confirmed that the energy price guarantee that limits the typical annual bill to £2,500 is to be extended.
The scheme had been due to change in April, with the ceiling increasing to £3,000 a year, but the chancellor announced before the financial markets opened this morning that the present level would remain for another three months. Hunt said: “This temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
Today he will present his budget statement in parliament, in which he is expected to set out a multibillion-pound three-year package of business tax breaks to encourage investment.
The chancellor has been criticised by Tory MPs for his plan to increase corporation tax from 19 per cent to 25 per cent from April. Hunt and Rishi Sunak are adamant that the rise will go ahead. But in an effort to limit the impact of the increase, Hunt will allow businesses to offset 100 per cent of investments in infrastructure and factory and machinery assets against profits for tax purposes. The move will enable companies that invest in the UK to significantly reduce their tax bills.
One government source said the concession would cost about £7 billion a year over three years. However, it remains significantly less generous than the “super-deduction” scheme it replaces, which allowed companies to write off 130 per cent of investments against profits. That scheme cost £25 billion over two years.
The chancellor is also expected to announce:
• An extension of free childcare provision to all children aged one and two — an attempt to “break down the barriers” to work.
• A one-year extension of the 5p cut in fuel duty, at a cost of £6 billion.
• An increase in the pensions lifetime allowance from £1.07 million to £1.8 million, benefiting up to two million people.
• A £5 billion increase in defence funding over the next two years, although this is less than half the amount requested by the Ministry of Defence.