To help with the rising energy bills this winter, the UK government has announced supporting payment measures for households. A range of methods has been planned to help UK households, especially those on lower incomes.
In October, Ofgem will release the new price cap, expected to soar to a record high of £2,800 a year, an almost 42% increase from the current cap of £1,971.
Combined with the cold winter months coming ahead, many households could be forced to make drastic decisions.
To combat this, Rishi Sunak, the chancellor, has set out this latest support to help people manage the soaring energy bills, with measures being paid in different ways. Let’s take a look at the latest news.
How Will The £400 Discount Be Received?
From October, in the UK, all homes have access to the grant that will see a £400 decrease in energy bills. This figure has risen from an initial £200 that had to be repaid in instalments over the next five years.
However, the recent change has seen this double, as well as a cancellation of the repayment. This means that from October, your energy bill will be £400 cheaper due to the grant.
You do not have to do anything to receive this payment, it will automatically be made by your energy supplier. Therefore, you do not need to apply or contact your supplier.
Credit and direct debit customers will see the funds credited to their accounts over the course of six months from October. Customers that have a prepayment meter will see the funds applied via a voucher to their meter.
When Will I Get The £400 Discount?
It is expected that bills from October will receive the £400 discount, however, it is likely to be spread out over six months. With Ofgem, warning prices may rise to £2,800, and the discount comes around the same time as the new price cap update.
Do Customers On Benefits Get Extra Support?
Over eight million low-income households will receive a £650 payment. Some of those homes will include those who receive:
- Tax credits
- Universal credit
- Pension credit
- Other means-tested benefits
Similarly, this payment will be made automatically, but this time into bank accounts. This will be done over two instalments, firstly in July and then the second coming sometime in autumn. Those on tax credits will see payments follow shortly afterwards.
In September, anybody who receives disability benefits will be given £150, with a possibility of being added on top of the £650 payment. Households that receive disability benefits often have higher energy use. Those who are entitled to the extra £150 will be people receiving the following benefits:
- Disability Living Allowance
- Armed Forces Independence Payment
- War Pension Mobility Supplement
- Attendance Allowance
- Personal Independence Payment
- Scottish Disability Benefits
- Constant Attendance Allowance
Will Pensioners Get Extra Support For Winter Fuel Bills?
In November or December, an additional £300 will be added to households receiving the Winter Fuel Payment. The Winter Fuel Payment is paid to most homes that have at least one person of pension age and is £200-£300.
In addition to the £650 support, those on benefits, lower-income pensioners claiming pension credit will receive the money on top. When added together, a total of £1,500 is available for a small group of pensioners with disabilities.
Will My Landlord Receive The £400 Discount Or Me?
This will ultimately depend on how your energy bills are paid. If you are the person that is responsible for paying for your gas and electricity, £400 will be added to your account.
However, your landlord will receive the funds if your gas and electricity are included in your rent because they are responsible for paying your energy bill. There is a concern that landlords may not pass on this reduction, however, they are expected to.
What Discounts Are Currently Active?
Currently, a £150 energy rebate is received by roughly 80% of households mainly through your council tax bill. This will depend on factors such as the method of paying your council tax bill, such as via direct debit as well as the area of the country you live in.
Fuel vouchers have been made for some through the Household Support Fund distributed by councils.
If you are looking to save energy and reduce your energy bills, a free and easy way is to use an electricity usage calculator. If you’re a business or homeowner, anyone can use this tool to see how much energy is being used, as well as if you can save money.
If I Have Solar Panels Will I Receive The £400 Discount?
Yes! Those will solar panels will still receive the £400 discount as long as you’re paying an energy bill.
How Is The Government Paying For The Discount?
To raise around £5bn over the next year, a windfall tax will be imposed on energy companies. Renamed as the temporary levy by the chancellor, companies that get oil and gas out of the ground will be taxed.
These companies have been seeing massive rises in profits due to Russia’s invasion of Ukraine and the world emerging from the pandemic. Therefore, their profits have come from something they were not responsible for.
Will My Second Home Receive The £400 Discount?
Your second property will receive the £400 discount as long as you are in charge of paying the energy bill for this home. Again, this will be applied to your energy bill like normal.
If I Live On A Boat Or In A Caravan Will I Receive The £400 Discount?
Usually, a fee will be paid by caravan owners to the owner of the park. This fee will include energy use, meaning the £400 discount wouldn’t go to you, but to the bill payer.
People living in boats also won’t have the discount applied directly to them due to docking fees typically included in the price. However, park owners and dock owners could pass on the discount to you, but it doesn’t necessarily mean they will.
Is The Cost Of Living Still Going To Rise?
Right now, prices in the UK are skyrocketing at rates faster than we have seen before in the last 40 years. In addition, estimates suggest that rates will continue to rise.
Meanwhile, there is a big question mark over energy prices over the next few years. The war in Ukraine will have a large impact on what happens to the wholesale energy market due to energy supplies from Russia.
This may see more companies switching to renewable energy, with the UK already focused on becoming net-zero by 2050. You can find out which providers use renewable products to see if you could save money by using a green energy supplier here.