The government has revealed a £15 million giveaway to help people cope with the rising cost of living. Households will see their energy bill cut by £400 and those with the lowest incomes will receive at least £1,200 in additional support.
The initiative will be paid for through a windfall tax on the “extraordinary” profits being made by oil and gas companies. It is known as the Energy Profits Levy and is expected to generate £5 billion.
“We are raising emergency funds to help millions of the most vulnerable families who are struggling right now,” Chancellor Rishi Sunak said. “All households will benefit from universal support for energy bills of £400 – with not a penny to repay.”
The Chancellor is doubling the help available through the Energy Bills Support Scheme from £200 to £400. He will also change the support scheme from a loan that people will need to pay back, and instead make it a grant that does not need to be paid.
Households will also benefit from a £150 council tax rebate for homes in England, which sit within bands A to D. This will make them £550 better off than before the measures were announced.
In addition, there will also be help for the most vulnerable. As many as 8 million households on the lowest incomes will be given a one-off Cost of Living Payment of £650. This will be given in two payments, one in July and the second in the autumn. It will be sent directly into the bank accounts of people on means-tested benefits, eliminating a need to claim for it.
Pensioners will receive a one-off Pensioner Cost of Living Payment of £300. An estimated 6 million people who receive means-tested disability benefits will be given a one-off Disability Cost of Living Payment of £150 in September.
Many of these people will also receive the £650 Cost of Living Payment for low-income households, bringing the total up to £800.
To aid those who do not fall into these categories, the government will also put an additional £500 million into the Household Support Fund from October. This enables local councils in England to help those in most need, with payments going towards the cost of food, energy, and water bills.
This is all happening because inflation is currently at a 40-year high of 9%. Supply chain disruptions caused by both the pandemic and the war in Ukraine have increased the price of many goods. Energy bills are one area where people have been hardest hit. Regulator Ofgem announced a 54% increase in the energy price cap in April, warning that it will rise again in October.