This year’s Budget has taken place against the backdrop of the unprecedented cost of living crisis.

While gas tariffs are set to fall be 16% in March, they will remain high – and now electricity prices, which have been capped at 22p a unit over the winter, are set to rise substantially in the spring.

Government provided a £26m repayable loan to Manx Utilities to cushion the public from higher prices.

In the end the authority did not have to call upon the loan and was able to absorb the tariff freeze from its own funds.

But now Manx Utilities, which was exposed to a £50m loss during the year, can no longer protect its customers from increased tariffs.

Treasury Minister Dr Allinson said: ‘The idea of the electricity price cap was to get people through the winter to allow them to adjust to a climate where energy is more expensive.

‘Most economist feel gas prices will never go down to the historic prices they were before 2020.

‘Similarly, it is very doubtful whether electricity prices will ever down to where they were before, particularly because of the increasing investment that is going to be needed to try to drive a greener economy.’

He said significant increases in electricity prices would have a big knock-on effect to the government estate as well as residents.

Government has also provided targeted cost of living support to the tune of £17m over the past year.

This included three rounds energy support payments of £300 were paid to up to 3,500 households and three rounds of family support payments worth up to £400 each which reached more than 6,000 families.

Dr Allinson said:’From a Treasury perspective for the last three years we’ve been intervening in people’s lives and in the economy in ways that we never anticipated through targeted payments to individuals, families and businesses. We need to get away from that if we are to have a sustainable budget.’

He insisted that the resilience of the current economy, the fact that we’ve got full employment, wage increases that aren’t being fed through to price increases and a degree of inflation will get the island’s public finances through the tough economic climate.