In response to surging energy costs and economic pressures, the United Kingdom introduced a sweeping set of measures in October 2022 aimed at reducing the financial burden on both households and businesses. The initiative, spearheaded by the Energy Prices Act, led to the implementation of the Energy Bill Relief Scheme and the Energy Price Guarantee. These programs were designed to cap the amount that consumers and companies would pay for energy, effectively shielding them from the volatility of global energy markets.
Under the Energy Price Guarantee, household energy bills were subsidized to prevent them from exceeding predetermined levels, ensuring affordability as prices spiked. For businesses, particularly small and medium enterprises, the Energy Bill Relief Scheme provided parallel protections, offering discounts on wholesale gas and electricity prices. This comprehensive approach marked a significant intervention by the UK government to stabilize the domestic economy and provide much-needed relief during the energy crisis.
Simultaneously, the UK took steps to address the extraordinary profits accrued by energy producers amid the crisis. A windfall tax was introduced targeting oil and gas companies whose earnings surged due to elevated global prices. This tax was intended to redistribute some of these excess profits back into public funds, which would then be used to support the subsidy programs and other public services.
Internationally, oil markets were experiencing significant turbulence. The Group of Seven (G7) nations moved toward implementing a price cap on Russian crude oil as part of broader sanctions related to the conflict in Ukraine. The proposed cap, set at $60 per barrel, aimed to limit revenue to the Russian government while ensuring stable global oil supplies. Although introduced in concept during October, the cap was officially enforced in early December 2022.
These coordinated efforts reflected a growing global consensus on the need to manage energy affordability while maintaining economic and geopolitical stability. For the UK, the dual approach of consumer subsidies and corporate taxation underscored a commitment to equitable economic policy and energy security amid one of the most challenging periods in recent energy history.
