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Britain’s biggest energy firms escaped being hit by Labour’s price freeze and have been ordered to cut their bills. The new Energy Secretary Amber Rudd has written to the six energy firms asking them to ease the pressures that they have put on families.

Since Labour threatened to freeze prices if Ed Miliband became the prime minister, gas and electricity bills increased and since he was defeated in the general election, the prices have not lowered at all. The promise by Labour involved an 18-month freeze, which also allowed energy companies to argue that they could not reduce tariffs too much before the election. This was because they could have been forced to keep them at the new low level.

This also meant that the big six energy companies were able to keep prices artificially high, which in turn, dramatically boosted their profits. The new Conservative government has said that energy firms must take action to reduce their charges. This is a result from the companies who saw their wholesale costs drop by 30%, yet they only reduced bills by 1.3% last winter.

Amber Rudd has written to British Gas, npower, EDF, e.on, Scottish Power and SSE to tell them that they should stop keeping their prices artificially high. In one year, the energy firms’ average profits have increased by 32% to £120 per household, according to the regulator Ofgem. This means that the energy firms are seeing an all-time high on their part.

The consumer group Which? estimated that the average family has lost out on £145 a year because the providers have failed to pass on lower costs. The Competition & Markets Authority has decided to start an inquiry into whether the companies have rigged the market by delaying price cuts. The Authority holds particular concern over the 60% of households who are on standard contracts because they pay more than those on non-standard tariffs. Loyal customers are also missing out on up to £234 over one year because they did not switch providers.

Members of the Institute of Directors (IoD) have said that they think the new Conservative government should make bringing down the deficit a priority.

A survey was conducted with 1,211 Institute of Directors members taking part and the end result indicated that they believe the deficit reduction should be achieved mainly through spending cuts rather than tax rises. Other major policy areas that the business body’s members would like to see addressed by the government are infrastructure and education.

Over half of the members who took part in the survey, which was conducted immediately after the general election, strongly disagreed with increases in national insurance, income tax, VAT and business rates.

According to the research, improving the UK’s broadband capability, investing in energy generation and spending more on railways was said to be important to members. As well as this, a crackdown on tax avoidance was also top of the list.

 

George Osborne has stated that he will deliver a new Budget on the 8th July. He said that it would focus on raising productivity as well as living standards and that this unusual move of having a second Budget within a one-year period is to keep the commitments made to people in work.

The chancellor gave a broad outline of his plans for the next budget but would not comment on the details, including the Conservatives’ planned £12 billion of welfare cuts, Osborne said outside 11 Downing Street. The previous Budget was held on 18 March and included tax cuts for first-time house buyers. After this Budget, the independent forecaster in Institute for Fiscal Studies (IFS) stated that Osborne needed to say exactly how he could go ahead with his plans to cut £12 billion from welfare spending. Of these cuts, £2 billion were outlined ahead of the general election and all cuts are predicted to be in place between 2017 and 2018.

If the economy performs as forecasts made by the independent Office for Budget Responsibility say it should, borrowing will be reduced to £41 billion in 2016-17 and £14.5 billion in 2017-18. However, by 2018-19 the plan for the UK is to be running a budget surplus of £4 billion.

The Conservatives were under pressure form the Institute for Fiscal Studies (IFS) during the election campaign that wanted an explanation as to how they would find the remaining £10.5 billion, considering they gave details of how they will find £1.5 billion of savings from the UK’s social security budget.

The IFS said that the scale of the overall savings would involve the Conservatives looking at child benefit, child tax credit and disability allowances. The Budget would announce reforms of welfare that intended to protect the vulnerable while also making sure that the system is fair to taxpayers, according to the Treasury.

Osborne will say in the Budget that the Conservatives plan to have a fair and balanced approach to the deficit reduction and that the package will include a promise that spending on the NHS will be improved while cutting £13 billion from other Whitehall departments. In addition, designed to raise £5 billion will be a fresh crackdown on tax avoidance.

The timing of the Budget on the 8th July will mean that the Office for Budget Responsibility will produce new forecasts for the economy and the public finances. They will also give time for a finance bill to be passed.