Chancellor of the Exchequer Rishi Sunak unveiled on 26 May the latest plans from the government to assist the country as it goes through the cost of living crisis.
Measures include a one-off £400 energy discount for all British households and an additional £650 reduction for the lowest-income homes. Pensioners eligible for winter fuel payments will also receive an extra £300, and those receiving disability benefits will receive an additional £150.
This comes after households in Britain recently faced huge increases in energy bills – and one energy regulator has predicted that, come autumn, bills will increase once again by a further £800.
The energy regulator Ofgem announced on 25th May that the energy price cap may rise as high as £2,800 in Octover 2022, a nearly 50% increase on the current £2,000 cap.
Windfall tax
Sunak plans to partially fund the support package via a 25% windfall tax on the profits made by oil and gas companies – a move which he hopes will raise around £5bn this year.
Crucially, the measures in the package are ‘stackable’, meaning that those eligible for multiple instalments of financial support will be able to claim multiple payments.
Spending an extra £1,000 on energy
The £400 discount comes as a revised version of the government’s ‘rebate and clawback’ scheme unveiled in the spring, which was set to give households £200 off energy bills in the autumn, but faced widespread criticism as the payment was essentially a loan that would have to be paid back over five years.
The new update, however, has doubled the discount and is non-repayable, with the rebate automatically credited to accounts in the October of this year.
In addition to the £150 council tax rebate announced by the Chancellor earlier in 2022, the new scheme will mean British households will receive at least £650 in financial support from the government this year.
However, given that, before April 2022, the energy price cap sat at around £1,300 for most households, its predicted rise to £2,800 by the end of the year means a £1,500 increase in extra energy costs. Despite the government support, this means than most families in Britain will be close to spending an extra £1,000 on energy in 2022 alone.
U-Turn?
Shadow Chancellor of the Exchequer Rachel Reeves pointed out that the windfall tax being used to fund the scheme was originally proposed five years ago by the Labour Party. In a Tweet, Reeves wrote that ‘with the government’s u-turn, there is no doubt about who is winning the battle of ideas in Britain – it is Labour.’
Labour leader Sir Keir Starmer also highlighted this U-Turn from the Conservative government, noting that the policy had originally been criticised by Tories for being ‘unconservative.’
On Twitter, Starmer questioned; ‘Why has it taken them so long while households suffered?‘