Chancellor Rishi Sunak has announced that millions of households will be eligible to receive energy bill rebates of up to £350 to help ease the burden of rising prices.
The move comes after energy sector watchdog, Ofgem, indicated that bills will increase by £693 per year from April, with the energy price cap going up from £1,278 to £1,971.
Sunak suggested that even individuals on “middle incomes” would “feel the pinch” and so targeted help measures were necessary.
All households in England, Wales and Scotland will be able to receive a £200 rebate from October, while from April a £150 council tax rebate will go to around 80 per cent of homes in England which sit in council tax bands A to D.
The energy bills rebate will provide around 28 million households with an upfront discount on their bills, with suppliers applying that discount to domestic electricity consumers from October. The costs will be covered by the government.
The discount will be recovered from people’s bills in equal £40 instalments over a five-year period from 2023, by which point ministers hope that wholesale gas prices will have subsided. Meanwhile, the council tax rebate will not need to be repaid.
Sunak said that the measures would help “take the sting” out of rising energy prices and help households “adjust” to higher costs.
The rebate scheme will be backed by a £9 billion help package from the government, funded through £5.5 billion and repaid by the £40 instalments on people's bills over the next five years.
The chancellor opted to stop short on cutting the five per cent VAT rate on energy bills which some Conservative and opposition MPs had clamoured for, saying that it would disproportionately help richer households.
Meanwhile, the Bank of England has upped interest rates to 0.5 per cent to attempt to ease price rises, in what was the first successive rates increase for almost 20 years. The Bank’s Monetary Policy Committee voted with a majority of five to four for the rise, with the minority favouring a larger increase of 0.75 per cent.
Speaking separately to the BBC about the recent partygate controversy, Sunak said that prime minister Boris Johnson had his “full support” but acknowledged that the saga had damaged the trust of the public in government.
He said: “I can appreciate people's frustration. And I think it's now the job of all of us in government, all politicians, to restore people's trust.”
Sunak also denied that he was planning his own bid for the Conservative leadership, insisting that he was focused on his current role and tackling the cost-of-living crisis.
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