I know from correspondence received and conversations had locally, that many of my constituents have real concerns about the cost of living and increase in energy bills. I wrote previously about support measures available to households that may be struggling, and I would now like to explain the Chancellor’s most recent support package, worth £9.1 billion.
What does the support package include?
- A £200 discount this October for domestic electricity customers in GB. This will be paid automatically to all eligible customers and will be paid back over the next five years in £40 instalments.
- A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England- equivalent to 80 per cent of all households, helping both lower and middle-income families.
- £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate.
- The Government is also continuing with plans to increase the Warm Homes Discount and extend eligibility by one-third to 3 million vulnerable households which is worth £150.
Why is the government providing support?
- The government recognises many households will need support to deal with rising energy costs, which are being affected by global factors.
- From 1 April, the energy price cap will rise from £1,277 to £1,971 – an almost £700 increase in energy bills for the average household.
- Wholesale gas prices have quadrupled in the last year. Because gas is used for electricity generation this pushes up retail electricity bills as well as retail gas bills.
How will the Energy Bill Discount Scheme work?
- Every domestic energy customer in Great Britain will receive a £200 cash discount on their bills this Autumn. The government will provide funding to all suppliers for them to pass on to their domestic energy customers from October. There is no opt-out option.
- Customers will pay back the discount automatically in equal instalments over five years, starting from financial year 2023-24, when wholesale gas prices are expected to come down. This is expected to be reflected as an increase to standing charges on bills.
- This approach will help to spread the increased costs of global prices over time in a way that is more manageable for households.
- The Department for Business, Energy and Industrial Strategy will set out more detail on this policy in a consultation in the spring.
How will the Council Tax rebate work?
- Households in England in Council Tax Bands A-D, who are not exempt from Council Tax, will be eligible for a £150 non-repayable Council Tax Rebate payment from April this year. This is equivalent to around 80 per cent of households and does not include second homes or empty properties.
- Households will also be eligible if they pay less than £150 or no not pay Council Tax as a result of Local Council Tax Support, or people in receipt of the Single Person Discount.
- We expect the vast majority of people who pay by Direct Debit to receive this money in April. For households in Bands A-D who do not pay by Direct Debit, their councils will be ready to process their claims in April.
- For those who need help with their energy bills but are not eligible – such as households on income support in higher bands (E-H) or with properties in bands A-D that are exempt from council tax – local authorities will receive £144 million of discretionary funding to help.
- Further details will be set out by the Department for Levelling Up, Housing and Communities and local authorities
What other help is available for people struggling with the cost of living?
- These new measures are on top of the existing £12 billion support the government is providing for the cost of living this financial year and next. This includes reducing the Universal Credit taper rate, raising the National Living Wage, freezing alcohol and fuel duties and providing targeted help with energy bills.
- The table below shows the total available funding per household to support with energy bills, depending on eligibility.
- The government is continuing with plans to expand eligibility for the Warm Home Discount by almost a third and increase the rebate value to £150 each year (from £140). 3 million vulnerable households will now benefit from the £150 supplier rebate. More detail will be published shortly in the government response to the consultation on this.
A fuller explanation of how the government is helping with the cost of living is attached below. This includes measures such as the increase in the National Living Wage, the £500m Household Support Fund and the £140 million Discretionary Housing Payment.
If you have any further questions about support available, please do contact my office at [email protected]