Households are to get up to £350 in cash to help with their energy bills this year, Chancellor Rishi Sunak has announced. The move comes after widespread pressure from campaigners, including MoneySavingExpert.com founder Martin Lewis, for the Government to step in to help households during the cost of living crisis. Here’s what you need to know.
Over £9 billion in state-backed loans will be made available to households in England, Scotland and Wales, it’s been revealed today – providing up to £350 per household to help soften the blow of rocketing energy prices. This follows regulator Ofgem’s earlier announcement today of a 54% increase to the energy price cap (about a £700/year hike to a typical bill), due to record wholesale energy prices (those providers pay).
The new measures announced today include:
A £200 rebate loan in October to all households. You’ll get an automatic £200 discount on your bills, regardless of what tariff you’re on.
A £150 council tax rebate in April to all households in England for those in council tax bands A to D. The Chancellor has also announced a total of £565 million in funding for the Scottish, Welsh and Northern Irish Governments to provide similar funding for households. See more info in our Households to get £150 off council tax bills MSE News story.
About a £144 million discretionary fund for councils aimed at those on low incomes who don’t qualify for help due to their council tax band. This is to help those on low incomes who don’t qualify for the £150 support above because, for example, they’re exempt from council tax.
The help is flat-rate, so you get the same regardless of your usage or income (providing you qualify under your council tax band) – that means the lower your usage, the bigger the benefit, as the more energy you use, the higher your bills are.
These measures are aimed at mitigating the current high costs of energy, so while the support announced today will help many struggling with their bills, it won’t cover the full cost of the energy price hikes, following the £700/year standard-tariff rise announced today. See our Struggling with energy bills? guide if you find yourself unable to keep up.
It will also likely increase energy bills further over the coming years, as the £200 help in October will be paid for by reclaiming about £40/year from all households’ energy bills over the next five years (the Chancellor said the council tax rebate won’t need to be paid back).
Martin’s immediate thoughts on today’s cost of living crisis news, including the energy bill and council tax rebates
How will the £200 rebate on energy bills work?
The Government has yet to confirm the full details on how the energy bill rebate will work, but it has said all households, regardless of what tariff they’re on, will get a £200 discount on their energy bills – providing help to about 28 million households.
While we don’t know exactly how this will be paid yet, the Government did tell us that it’s unlikely to be a one-off, lump-sum payment, and more likely to be paid in instalments. However, this is not confirmed yet, and the details will be worked out at a later date.
You’ll also get the full £200 if you’re in an electricity-only household – as the support is for household energy bills, regardless of how you heat your home.
If you’re on prepay, you should get the rebate automatically if you have smart meters, while those without smart meters will get a voucher or cheque, similar to how the warm home discount is paid for those on prepay.
The £200 discount will only be available for those in England, Wales and Scotland, though the Government has said Northern Ireland will receive funding to deliver the scheme separately.
How will the £150 rebate on council tax bills work?
For those in England, the £150 discount on your council tax will be applied automatically if you’re eligible, so you DO NOT have to apply – your local authority will automatically recognise if you’re eligible.
If you pay by direct debit, your payment will be adjusted to deduct the £150, while for those who pay by debit or credit card or with cash at a post office counter, local authorities have been instructed to adjust April bills in line with the discount.
As it only applies to households in council tax bands A to D, the Government has announced additional funding of £144 million to offer the same rebate to lower-income households that don’t pay council tax, or those in bands E to H. You’ll need to speak to your local authority to check you qualify if that’s you.
Devolved governments in Scotland, Wales and Northern Ireland are also expected to receive about £565 million to offer similar funding to households.
For more information, see our Households to get £150 off council tax bills MSE News story.
Warm Home Discount scheme to be expanded and funding raised to £150
The Government has also announced today that it will go ahead with previously proposed plans to expand eligibility for the warm home discount, and to increase the payment from £140 to £150 from October.
This will see an extra 780,000 homes qualify for the scheme – which provides help to vulnerable customers to pay for their energy each winter – meaning that about three million households in total will be able to benefit from the scheme next winter.