Rishi Sunak Announces £350 Government Rebate To Help Pay Fuel Bills

The "vast majority" of households will receive £350 of help to take the "sting" out of rising energy bills, the chancellor has announced.

Rishi Sunak said 80% of all homes in England will get a £150 discount on their council tax bill in April, while all domestic electricity customers will get £200 in October off their energy bills.

The latter amount will be repaid over five years, starting from next April, although the council tax rebate will not need to be paid back.

This is aimed at limiting the effect of price rises in April, but the money will be recouped from consumers in the following years in equal £40 instalments so the loans can be paid back as energy prices fall.

Households in council tax bands A, B, C and D will be given a rebate funded by government grants.

Councils will also be given almost £150m to help lower income households who live in higher council tax properties and households in bands A to D who are exempt from paying council tax.

"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," Mr Sunak said.

The announcements from the government represent a bid to help millions of households struggling with the increasing cost of living.

Boris Johnson has acknowledged there is a "real cost of living crunch" as the country emerges from the COVID pandemic, but the prime minister said the "mega package" unveiled by the chancellor will help.

Energy bills continue to rise, with the regulator Ofgem confirming on Thursday that there will be a 54% rise in the price cap from 1 April to £1,971 due to soaring wholesale gas prices.

It means energy prices will rise by £693 a year for millions of households who are on their energy supplier's default tariff.

Customers on prepayment meters will see the price cap increase by £708 to £2,017.

"Without government action, this could be incredibly tough for millions of hardworking families. So the government is going to step in to directly help people manage those extra costs," the chancellor said.

Mr Sunak ruled out cutting VAT on energy bills, saying such a move would "disproportionately benefit wealthier households" and become a "permanent government subsidy on everyone's bills".

Labour's shadow chancellor Rachel Reeves criticised what was being offered by the government and said it was a "pale imitation" of what her party has called for.

"High prices as far as the eye can see - this year, next year and the year after that, give with one hand now and take it all back later," she said.

"The party opposite used to talk about the nation's credit card, well today we've seen the chancellor force British households to load up their credit cards.

"By lending billions of pounds to energy companies, the chancellor is gambling that prices are going to fall - but they could go up further in October. What then? Billions more loaded onto people's bills?"

She said the Conservatives should adopt Labour's policy of increasing the warm homes discount to £400 and extend it to nine million households.

Ms Reeves highlighted Labour's call for a windfall tax on oil and gas producers and accused the chancellor of seeking to "shield" them.

"The Conservatives aren't solving the cost of living crisis because the Conservative Party are the cost of living crisis," she told MPs.

Mr Sunak said in response that Labour "may have some soundbites but they certainly don't have a policy".

He said a windfall tax was "superficially appealing" but risked deterring investment.

As well as rising energy costs, households face pressures in other areas.

Also on Thursday, the Bank of England raised interest rates from 0.25% to 0.5%, the first back-to-back increase since 2004.

It means higher monthly payments for those on certain types of mortgages and comes amid rising inflation which is pushing up prices.

Households also face a 1.25 percentage point increase in National Insurance contributions from April.

The government has come under pressure to scrap the latter policy - which will generate revenue to tackle backlogs in the NHS and fund social care - but both the chancellor and Boris Johnson have said they are sticking to it.