Rishi Sunak announces plan to help 20m households with council tax and energy bills cut | Personal Finance | Finance
New changes will come into force on April 1, giving Britons just weeks to prepare for a significant change.
Ofgem has brought forward its announcement, providing Britons with details earlier than expected. Originally, its announcement was set for this coming Monday, but this was changed amid swelling fears about the maximum energy tariff.
This winter, average energy bills were recorded at £1,277 per year, but prices will rise to £1,971.
Jonathan Brearley, chief executive of Ofgem, said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.
“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.”
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“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”
Dr David Deller, a senior research associate at UEA’s Centre for Competition Policy (CCP), said: “A large rise in the energy price cap is likely to have a significant impact on the affordability of energy for many households, particularly those on low incomes.
“Research by the Centre for Competition Policy shows that lower income households spend a considerably higher proportion of their total expenditure on energy than households further up the income distribution.
“This means energy bills are far more prominent to them and, more importantly, they are more likely to face difficult choices regarding whether to reduce their energy consumption or cut back on other spending.
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“In the long-run perspective, it seems likely that energy affordability difficulties will reach a level last seen around 2013 or possibly in the late 1980s.”
Inflation is expected to soar to more than three times the Bank of England’s target, it was also shared today. While the Bank of England has a target of six percent, the rate may be set to far exceed this.
The last time inflation in Britain was that high was in 1991, putting a significant squeeze on finances.
Colin, who works for Money Matters, expressed his concern about the increase to the price cap to Sky News, and said: “How can that be justifiable? Clearly the energy market is broken.”
He added: “It’s a lot more than I was expecting.”
The Chancellor Rishi Sunak has unveiled support measures to help families struggling to make ends meet.
Mr Sunak came under increasing pressure in recent weeks to introduce emergency assistance on the matter.
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He told the Commons: “For all the progress we are making, the job is not yet done. We will help people deal with one of the biggest costs they now face – energy.
“Without Government intervention this would be very tough for millions of hard-working families.
“The Government is going to step in to help people manage those extra costs.”
He said the Government will help 28million households this year, in three different ways.
Firstly, the worst costs will be spread over time. All domestic customers will receive an upfront discount of £200.
A £150 council tax rebate will also be given in April – which won’t have to be repaid – to help with the cost of energy.
This will be for households in Bands A-D – where 80 percent of households will benefit.
£150million will be given as a discretionary fund to local authorities to help.
The Government will also expand eligibility for the Warm Home Discount to help more households.
However, John O’Connell, chief executive of the TaxPayers’ Alliance, said: “This announcement amounts to nothing more than giving with one hand to take with the other.
“The Chancellor’s bailouts for energy firms do little to reverse the root of the energy crisis, while the council tax rebate is only papering over the cracks of the government’s own policies.
“If ministers really want to help households with the cost of living, they should power ahead with suspending green levies and the planned National Insurance hike.”
