Commenting on Chancellor Jeremy Hunt’s statement, Mark Littlewood, Director General at free market think tank the Institute of Economic Affairs, said:

“The Energy Price Guarantee was always an unnecessarily expensive programme, representing perhaps the single biggest welfare scheme in British history. As many of us said at the time, it is absurd to subsidise wealthy households to keep heating their swimming pools. A more targeted approach from next year is warmly welcome and will save significant money.

“There is a clear need to improve the government’s fiscal position to calm the gilt markets – it’s disappointing, however, that so much of the heavy lifting will come from higher taxes. The central lesson from this episode is that the government cannot keep living beyond its means. 

“The risk of raising taxes is that they put Britain back on the path towards a high tax, low-growth economy. As Goldman Sachs warned yesterday, higher corporate tax rates could deepen any forthcoming recession and ultimately damage the government’s fiscal position.

“The Chancellor has said it was irresponsible to fund tax cuts through debt. However, we must also end the fiction that we can keep funding day-to-day public spending through debt forever more as well. The government may have abandoned much of the central tax elements of their growth strategy, but that makes it even more important to get on with regulatory reform.”