The Chancellor has announced a set of emergency measures to help households struggling as the cost of living crisis spirals. The energy price cap is expected to rise again in October to an eye-watering £2800, having already increased by almost £700 to £1971 in April.
One of the measures of support unveiled on Thursday, May 26, was a universal discount on household energy bills. Initially, the reduction was worth £200 and in the form of a loan which had to be paid back for the government over five years. But since then, the crisis has worsened.
In response, Rishi Sunak confirmed the 'loan' had now been replaced by a grant, which doesn't have to be paid back. It's also been doubled to £400. Mr Sunak said: “Since then the outlook for energy prices has changed, I’ve heard people’s concerns over the impact of these repayments on future bills, so I’ve decided that those repayments will be cancelled.”
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“This support is now unambiguously a grant,” he said, adding “the £200 of support for household energy bills will be doubled to £400 for everyone”. The support will be funded by a new windfall tax on the profits of gas and oil firms, some of which have reported record figures in the first quarter of 2022.
Mr Sunak told MPs in the House of Commons: “The oil and gas sector is making extraordinary profits not as the result of recent changes to risk-taking or innovation or efficiency, as the result of surging global commodity prices driven in part by Russia’s war. For that reason, I am sympathetic to the argument to tax those profits fairly.”
The temporary one-off tax will be charged at 25 per cent, it was announced on Thursday. Mr Sunak said this “energy profits levy” will raise around £5 billion in a year to assist with the surging cost of living.
But is there anything people need to do to ensure they receive the £400 support? According to the government, the discount will come into effect for all households in the autumn.
The government is yet to release full details of how the grant will be given out, but it appears it will provided to households automatically, in a similar way to the council tax rebate, which came into effect in April.
According to gov.uk, households with a domestic electricity meter will be delivered the support via their energy suppliers over a period of six months from October. Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
"This support will apply directly for households in England, Scotland, and Wales. It is GB-wide and we will deliver equivalent support to people in Northern Ireland," the government website said.
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