The Energy Bills Rebate
Rishi Sunak announced on 3rd February 2022 that there will be a package of support to help households with rising energy costs, worth £9.1 billion in 2022-23. Millions of households will receive up to £350 to help with the cost of living following a rise in the energy price cap. Furthermore, all domestic electricity customers will get £200 off their energy bills from October, with 80% of households receiving a £150 Council Tax rebate from April.
The support package comes after energy regulator Ofgem announced an increase to the energy price cap. This is due to the soaring global wholesale price of gas, which has quadrupled in the past year.
The result of this is an almost £700 increase in energy bills for the average household from 1st April.
Sunak has acknowledged that the growing cost of living was the ‘number one issue on people’s minds’, and that the package was designed to support hard working families.
The Energy Bills Rebate will provide around 28 million households with an upfront discount on their bills worth £200. Energy suppliers will apply the discount to domestic electricity customers from October, with the Government meeting the costs.
However, the rebate is not a gift, it is merely a loan. The discount will automatically be recovered from people’s bills in equal £40 instalments over the next five years. Global wholesale gas prices are expected to come down in 2023, and so this is when the government will begin to recoup the payments.
What other help is available?
Households in England in council tax bands A-D will receive a £150 rebate. The rebate will be made directly by local authorities from April and will not need to be repaid. This one-off payment will benefit around 80% of all homes in England and is £1 billion more generous and more targeted towards lower-income families than a VAT cut on energy bills.
Moreover, there will be discretionary funding of £144 million made available 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.
The Chancellor also confirmed plans to go ahead with existing proposals to expand eligibility for the Warm Home Discount by almost a third, so that three million vulnerable households will now benefit, as well as the planned £10 uplift to £150 from October.
The government expect those who pay their council tax via direct debit to receive the rebate in April, with councils using bank account details to credit their accounts with a one-off payment of £150. However, households in Bands A-D who do not pay by direct debit, will have their claims processed by the relevant council in April.
Prime Minister Boris Johnson said the following:
‘During the pandemic, this Government has acted decisively to protect jobs and livelihoods, particularly for those on the lowest incomes. But today we recognise the real and growing concerns people have about the cost of living – and once again we are taking action. We are delivering a new package of targeted support to help with the financial pressures felt by families right across the country, with additional help for those most in need. This builds on the changes we’ve made to Universal Credit to put £1,000 more per year into the pockets of hardworking people and the increase to the National Living Wage to advance our vision for a high-wage and financially secure Britain.’
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