Spring Statement: 5% VAT scrapped on green household energy

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Gazprom Energy has suffered from heavy customer losses since the Russian invasion of Ukraine a month ago, leading Ofgem to consider contingency plans if the company does go into administration. Gazprom supplies about a fifth of the energy consumed by UK businesses across 100,000 sites here and in the Netherlands, France and Ireland.

It also holds offices in London and Manchester and employs around 350 staff.

Due to its size, Gazprom would be put into taxpayer-funded special administration, as was done with energy company Bulb when they went into administration in November last year.

While the majority of Gazprom’s clients are from industries such as ceramics, glass and steel, it accounts for some of the gas used by local councils and the NHS.

Health Secretary Sajid Javid has previously told the NHS to stop using gas from Gazprom, while Merton Council in London and Suffolk County Council have said they are attempting to break away from the Russian company.

A Government spokesperson said: “We are aware that Gazprom Energy has a large presence in the non-domestic energy retail market.

“Gazprom’s retail business continues to trade in the UK and customers should exercise their own commercial judgement with regards to energy supply contracts they have in place at the moment.”

This news comes as household energy bills are predicted to skyrocket later this year, as the energy price cap is expected to rise even further.

Brits are currently facing a rise of £690 on their energy bills to £1,971 from April, however the Office for Budget Responsibility (OBR) has forecast a further increase of £830 from October.

This would mean that by October household energy bills are likely to be around £2,800 per year, more than double the average price now.

Chancellor Rishi Sunak announced a package of support in February designed to help those struggling to pay, including a council tax rebate of £150 for four out of five homes and a £200 discount on energy bills, paid back in instalments over five years.

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However, he made no mention of further help in this week’s spring statement, according to the Times.

The OBR has predicted that global gas prices will start to come down in 2023, from £2.80 a therm to £1.80, they will still be considerably above the £1.27 a therm that Ofgem initially used to calculate the April price cap.

While Mr Sunak expects households to be able to start paying back their energy loans from the start of next year, the OBR forecast has cast some doubt over that possibility.

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