RISHI Sunak has announced a booster package for Brits today to help them through the energy bills crisis.
One part of the support includes a £150 council tax rebate and this one will not need to be repaid.
Whether you’ll get the money back is dependent on which council tax band you’re in, which is based on your home’s value.
People who live in the lower council tax bands will get the £150 refund.
Rishi Sunak said: “We’re going to give people a £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid.
“And I do want to be clear with the House that we are deliberately not just giving support to people on benefits.
“Lots of people on middle incomes are struggling right now, too – so I’ve decided to provide the council tax rebate to households in Bands A to D.
“This means around 80% of all homes in England will benefit.”
The news comes as Ofgem announced that the price cap will be raised by 54% – a figure even higher than many analysts predicted.
The new energy price cap comes into effect on April 1 and will take the average household bill to £1,971 a year.
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Ofgem suggest the price cap could be adjusted more frequently
It has been suggested by Ofgem that the energy price cap could be adjusted more frequently.
The regulator’s chief executive, Jonathan Brearley, told the BBC that they are still considering the move.
Brearley said the changes would mean “when prices go up it adjusts, but it will equally quickly adjust when prices come back down again”.
By doing so they hope to ease pressure on both energy suppliers and consumers.
Currently the price cap is reviewed every six months and the next time it could change will be August.
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Energy bill rises come as National insurance set to rocket
WORKING families will have to pay hundreds of pounds more in National Insurance each year as Boris Johnson and Rishi Sunak insist hikes will go ahead.
The politicians confirmed that the controversial raise will happen from April despite widespread opposition from conservative MPs, charities and financial experts.
The hike is billed as an increase of just 1.25%, but experts including Martin Lewis have warned that means taxpayer contributions will rise by more than 10%.
For someone earning just £20,000 – well below the national average salary – that translates to extra payments of £130.45 a year.
Someone earning £30,000 annually would pay £255.45 more, while on a salary of £40,000 would see payments rise by £380.45 annually.
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Warm homes discount offered to more
The Chancellor also confirmed the number of people eligible from the Warm Homes Discount will be increased by a third ahead of next winter.
It means a million more Brits will get an extra £150 support from October.
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Conservative members praised the package
Senior Conservative backbencher Robert Halfon praised the Chancellor’s response.
He told the Commons: “This is a cost of living package for white van men and women across the country.”
And fellow Tory Mark Harper, a frequent critic of No 10 over Covid rules, also backed the measures.
He said: “The Chancellor is responding to a global energy crisis with honesty and a package of targeted support after listening to backbench MPs’ views.”
Conservative MP for Wolverhampton, Jane Stevenson added: “This is quite simply a superb plan.”
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Tory MPs split over the Chancellor’s announcement
Ex Brexit Secretary David Davis said: “It is obvious we have to help families with the cost-of-living crisis, but the way we are doing it is strategically wrong.
“Charging people £100s extra on everything from fuel to income, and handing it back in drips and drabs will never work long-term.”
Fellow backbencher Peter Bone confronted the Chancellor and suggested the Government’s high tax, high spend polices are “socialist”.
He said: “Conservatives believe in holding taxes down and putting more money in people’s pockets so they can decide how to spend it.
“Socialists believe in raising taxes and then choosing to give it back in the form of discounts and rebates to selected people the Government thinks need it.”
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How will families be affected?
- Average gas and electric bills hitting £2,000 a year as the Government’s price cap is raised.
- Mortgage payments going up as interest rates set to double from 0.25 per cent to 0.5 per cent – the second increase in two months.
- Shoppers hit by the highest price rises in nearly a decade
- Petrol prices to rocket to record levels.
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How can I get a £150 council tax refund?
Whether you’ll get the money back is dependent on which council tax band you’re in, which is based on your home’s value.
People who live in the lower council tax bands will get the £150 refund.
Everyone on bands A to D will get the rebate as the government is attempting to target people on both lower and middle incomes.
Households with more expensive properties won’t be eligible for a refund.
You can find out your Council Tax band by checking with your local authority or on the postcode checker.
The government hasn’t confirmed when you should expect the refund, or if it will be taken off future bills.
The discount won’t need to be repaid.
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Mortgage repayments could be affected
When, and if, your mortgage repayments are affected by an interest rate change will depend on what type of mortgage you have and when your current deal ends.
If you have a variable rate tracker mortgage, linked to the Bank of England base rate, then you are likely to see an immediate impact on your mortgage repayments if there is an interest rate rise.
Those on a standard variable rate mortgage will probably see an increase in their rate of repayment, but your lender decides how much that is, so it could be more or less than the Bank of England increase.
The latest data from UK Finance shows that 26% of residential mortgages are on variable rates.
This means the changes will affect around 2.2 million borrowers.
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What will happen if you have a loan, credit card or overdraft?
Most unsecured borrowing such as car finance won’t usually be affected by an interest rate change.
This is because you agreed to pay a fixed rate of interest when you took out the loan.
But it is possible for the interest rate on your credit card or overdraft to rise.
Many customers of big providers such as Lloyds Bank, MBNA, Halifax and Barclaycard have their credit card rates directly linked to Bank of England base rate, so they will move automatically with any changes.
You’ll be given notice before this happens, subject to the terms and conditions of your account.
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Interest rates rise to 0.5% adding £700 a year to mortgages for 2million homeowners
The Bank of England has raised interest rates to 0.5% – its second increase to the base rate in two months.
The decision comes just an hour after the new energy price cap was announced, and will add £700 a year to over 2million mortgage bills.
Analysts had widely expected the central bank’s Monetary Policy Committee to increase the official interest rate from 0.25% to 0.5%.
The Bank of England caught many people off guard in December 2021 when its members voted to lift rates to 0.25% from a historic low of 0.1%.
It was the first increase in more than three years but commentators were expecting action again today as the rate of inflation, which measures the cost of living, has soared.
The inflation rate is currently at a 30-year high of 5.4% thanks to high energy and food prices.
Increasing the bank rate is a common lever for slowing down inflation.
But when the Bank of England raises interest rates, the cost of borrowing increases.
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MP Chris Bryant not happy with plans
Chris Bryant has hit out at Rishi Sunak saying ” £350 is not going to touch the sides.”
Christ Bryant has said that the new plans and figures will not help families, and said that the plans are ‘pretty puny stuff’.
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Rishi Sunak refuses to get rid of VAT on energy bills
He said getting rid of VAT would “disproportionately benefit wealthier households” and turn into a permanent subsidy costing £2.5bn a year.
Speaking in the Commons he also swatted aside Labour calls for a windfall tax on energy firms saying it would “deter investment” in Britain.
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Rishi Sunak outlines how the £200 discount will work
Rishi Sunak said: “This year all domestic electricity customers will get an upfront discount on their bills worth £200.
“Energy suppliers will apply the discount on people’s bills from October, with the government meeting the cost in full.”
“That discount will automatically be repaid from people’s bills in equal £40 instalments over the next five years.”
The full details of how the scheme works have not yet been announced, but we’ll update here when they are.
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What help can I get with my energy bills?
On top of the £200 energy bill rebate announced today, there’s other help you can get if you’re struggling with energy bills.
In the first instance it’s best to speak to your supplier directly if you are struggling to pay your bill or are worried about falling behind.
It’s best to do this sooner rather than later as failed direct debit payments could cost you extra and affect your credit score.
Many suppliers run their own schemes offering help, or have charitable trusts to help pay arrears.
British Gas Energy Trust, for example, runs a scheme where anyone can apply for a grant, and you don’t even have to be a customer.
Other firms that offer grants just to their customers include:
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£150m to go to Northern Ireland
It was confirmed by the chancellor that the energy bill help only applies to England, Scotland and Wales, as Northern Ireland has it’s own system.
However, he has said he will provide £150m to Northern Ireland for them to provide their own support.
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Labour’s shadow chancellor criticises Sunak
Rachel Reeves, Labour’s shadow chancellor has criticised Sunak for not getting rid of VAT on energy bills.
She said despite the pledges the “uncomfortable truth” is that families in Britain will still be paying hundreds of pounds more for energy after April.
She went on to say how millions of people will be cutting back to pay the bills.
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Energy bill rebates will be repaid £40 a month from April next year
Households will have to repay energy bill refunds in monthly instalments of £40 from April 2023.
Chancellor Rishi Sunak today announced that all energy customers will get a £200 discount on their energy bill.
The support is to help struggling Brits cover the cost of gas and electricity, as bills are set to soar £693 a year for around 22million consumers.
Customers will then pay back £40 a month from April 2023, when it’s hoped that prices will have dropped.
The full details of how the scheme works have not yet been announced, but we’ll update here when they are.
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One-off discount of £200
The Chancellor announced every home in Britain will get a one-off discount of £200 on this winter’s energy bills.
But it will be funded using taxpayer-backed loans, meaning providers will have to claw back the money in future via higher long-term prices.
Rishi also unveiled an emergency Council Tax cut for households in bands A-D, which will be worth £150 to the average family.
But that won’t even cover the cost of the upcoming National Insurance hike which will wallop workers for an extra £180 on average.
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80% of council tax payers get the saving
Rishi Sunak has said he willl give people in council tax bands A to D a £150 council tax rebate in April.
It will mean 80% of council tax payers in England get the saving.
There will also be £150m for local authorities in England to help lower income households.
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Package will help 28 million
Rishi said the new package would help 28 million households across the country and cost around £9 billion.
But he resisted calls from many Tory MPs to go further by axing green levies and VAT, which together make up almost a fifth of the average annual bill.
He said getting rid of VAT would “disproportionately benefit wealthier households” and turn into a permanent subsidy costing £2.5bn a year.
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‘Number 1 issue on people’s minds is the rising cost of living’
The Chancellor told the Commons: “Right now I know the number 1 issue on people’s minds is the rising cost of living.
“Just as the Government stood behind the British people through the pandemic so we will help people deal with one of the biggest costs they now face – energy.
“Without Government action this would be incredibly tough for millions of hard working families so the Government is going to step in to directly help people manage those extra costs.”
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‘It is not suitable to keep the price of energy artificially low’
Rish Sunak has said: “It is not suitable to keep the price of energy artificially low.
“For me to stand here and pretend we don’t have to adjust to pay higher prices we would be wrong and dishonest.”
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Rishi Sunak announcement
Rishi Sunak has taken to the stand.
He said “As we emerge from the depth of the worst recession in 300 years, we should be proud of the economic record.
“But for all the progress we are making, the job is not yet done.
“Without government action this would be incredibly tough for millions of families.”
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Official statement from Ofgem
Ofgem statement “The energy price cap will increase from 1 April for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding). Prepayment customers will see an increase of £708 from £1,309 to £2,017.
“The increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year.
“It will affect default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.
“The price cap is updated twice a year and tracks wholesale energy and other costs.”
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How is the cap calculated?
Different factors affect how much suppliers change what they charge you to meet the cap including where you live, your type of energy meter, and how you pay – by prepayment, direct debit or standard credit.
Your total energy usage will affect your total bill too.
But your supplier must automatically apply the price cap if you are on a default tariff.
You can often save money by shopping around as not all suppliers will charge the maximum amount.
But since the recent energy crisis has crippled most of the industry, many providers have taken up the full cap, and little competition has been seen between them.
Previous predictions from consultancy firm Cornwall Insight said the default tariff price cap could hit an eye-watering £2,240 by October this year when the next bout of changes comes into force.
