The UK Chancellor, Rishi Sunak, played a pivotal role during the financial struggles that hit many of us during the Pandemic.
Fast forward, and things seemed to be getting back to some normality; however, UK households are now being hit with another blunder. The rise in energy prices.
On April 1st this year, 22 million people could increase their energy bills by a staggering 54%.
The industry regulator, Ofgem, announced that the price cap set in February at £1,277 (per year) would rise to £1,977 this April. This will affect millions of households and cause a strain on their finances as they try to juggle their financial priorities.
How will the Government help me with my rising energy bills?
The Chancellor, Rishi Sunak, will be introducing a range of measures to assist those most affected by the energy rises and more long-term initiatives to make the UK more self-sufficient with their energy supply.
£150 Council Tax Rebate
A £150 council tax rebate will be offered to band A to D homes, including 95% of rented properties. This £150 will not have to be repaid. It is estimated that the council tax rebate will benefit around 20 million households.
You will not need to apply for the scheme to get the rebate. Instead, people who pay council tax by direct debit will see that the cash is sent directly into their bank accounts from April.
People who are not on a direct debit scheme with the council will still get the rebate; however, it will take longer.
Read more about council tax debt and arrears.
£200 Energy Bill Discount
The Chancellor announced that £200 would be deducted from your energy bills in October to help ease the pain of the rising energy costs.
The money will be given to the energy suppliers, and they will then cut everyone’s bill by £200. The £200 rebate will need to be paid back in five annual instalments of £40, starting in 2023.
The deductions will be automatically applied to energy bills, and customers do not need to act to pay back the loan.
Since the announcement, people have been complaining that the scheme should not be compulsory for everyone, and they should have the ability to opt out if they don’t or need the £200 discount.
Further details on how the rebate will be paid and how the instalments will be paid back to the Government will be finalised soon.
£144m Fund for Local Authorities
It has been proposed that local authorities be given a discretionary fund to help those on low incomes and vulnerable residents. This could apply to people who don’t pay council tax and won’t receive the rebate or are in bands E and H for the council tax.
This fund is discretionary, so it is up to your local council regarding how this is distributed.
£150 Warm Homes Discount Increase
Rishi Sunak has confirmed plans that he is set to expand the eligibility of the Warm Homes Discount. Currently, the scheme is £140 but this is set to increase to £150 in October. These new rules will benefit 3 million households.
Currently, the Warm Home Discount is paid to people on pension credit who are on a low income or receive means-tested benefits; however, the energy suppliers also have their criteria for who qualifies for the discount.
Read more about debt and claiming benefits.
Why are my energy bills going to increase?
· Gas supplies to Europe have been lower due to the global economic recovery, which has caused increased demand in Asia.
· Russia has been seen to be limiting the amount of gas supply into Europe to put political pressure on the EU to allow the approval of their plans of the Nord Stream 2. Permission has not been granted; however, this situation has now complicated matters with the political and military issues in Ukraine.
· Cold spells over the last winter and into the spring have led to lower-than-normal amounts of gas left in storage.
· It has been suggested that the UK is heavily reliant on their gas imports to heat homes compared to other European countries, which predominately use electric heating systems.
Will you be affected by the rise in energy costs in April? Are you already feeling the pinch in your pockets? If you think you will struggle with paying your bills, then take a look at some of our helpful debt help guides.