Govt pledges support to help households with soaring energy costs

Following the announcement of the energy price cap increase, the government has pledged support to help households with rising energy costs.

The support package comes after energy regulator Ofgem today (Thursday 3 February) announced an increase to the energy price cap as a result of the soaring global wholesale price of gas, which has quadrupled in the past year.

This will see almost a £700 increase in energy bills for the average household from 1 April.
 

Read more: Energy price cap to increase by £693 from AprilPublished: 03 February 2022

Households in England, which are in council tax bands A-D, will receive a £150 rebate. The rebate to bills will be made directly by local authorities from April. This will not need to be repaid. This one-off payment is expected to benefit around 80 per cent of all homes in England.

In addition, the Energy Bills Rebate will provide households in the UK with an upfront discount on their bills worth £200 – effectively a loan, which will later be paid back.

Energy suppliers will apply the discount to domestic electricity customers from October, with the government meeting the costs.

The discount will then be automatically recovered from people’s bills in equal £40 instalments over the next five years.

This will begin from 2023, when global wholesale gas prices are expected to come down.

Discretionary funding will also be provided to support vulnerable people and individuals on low incomes that do not pay Council Tax, or that pay Council Tax for properties in Bands E-H.

Chancellor of the Exchequer, Rishi Sunak said: “We will spread the worst of the extra costs of this year’s energy price shock over time.

“This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.

“Energy suppliers will apply the discount on people’s bills from October.

“That discount will be automatically repaid from people’s bills in equal £40 instalments over the next five years.

“This is the right way to support people while staying on track with our plans to repair the public finances.

“We’re going to give people a £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid.

“And I do want to be clear with the House that we are deliberately not just giving support to people on benefits.

“Lots of people on middle incomes are struggling right now, too - so I’ve decided to provide the council tax rebate to households in Bands A to D.

“Our plan allows us to provide more generous support, faster, to those who need it most, providing 28m households with at least £200, and the vast majority receiving £350.

“It is fair, it is targeted, it is proportionate - it is the right way to help people with the spike in energy costs.”