£350 government support to help with rising energy bills

The Chancellor has set out a £9.1bn plan to support individuals with soaring energy costs including a discount on council tax and a loan to cover some of the price rise

Millions of households will receive £350 of government support to help protect them from rising energy costs, Chancellor Rishi Sunak told MPs, but more than half the money is actually a loan.

The news comes as the energy price cap rises by 50% to £1,971 from 1 April, representing a £693 increase to average bills on variable rates. At the same time the Bank of England raised the interest rate to 0.5% with immediate effect.

All domestic electricity customers will get £200 off their energy bills from October, with 80% of households receiving a £150 council tax rebate on properties from Band A to Band D from April. This one-off payment will benefit around 80 per cent of all homes in England and the council tax element will not have to be repaid.

The £200 discount will only be a temporary measure and bill payers will have to pay back the money over five years, in a deduction from bills. There appears to be no way to opt out of the scheme either.

The discount scheme will only be available for main homes, not for second properties or holiday homes, and this will be monitored closely, said Sunak.

The government stated: ‘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.’

The Chancellor Rishi Sunak said: ‘Borrowing is set to fall from £320bn to £46bn by the end of this parliament. For all the progress we are making the job is not yet done.

‘We will help people deal with some of the biggest costs they face – energy. The government is going to step in to help people manage the extra costs.’

The government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.

‘We stood behind British people and businesses throughout the pandemic and it’s right we continue to do that as our economy recovers in the months ahead,’ the Chancellor added.

Sunak rejected Labour calls for the removal of VAT on energy bills, stating that this would benefit all energy users and would not be targeted enough, as it would not help those most struggling with soaring bills.

He also said that he had ruled out any option for windfall taxes on oil and gas companies, stating: ‘We deal with complex problems in a responsible way. The obvious impact of a windfall tax would be to deter investment. There are £11bn of projects ready to go in the North Sea – I want to see that investment go ahead.’

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. This follows a consultation by the Department for Business, Energy and Industrial Strategy to reform the policy so that more people will benefit.