Energy bills: council tax rebates and loans - how Rishi Sunak plans to help UK households amid price cap rise

Ofgem confirmed earlier that the energy price cap would rise to a record £1,971

Chancellor Rishi Sunak has announced the Government’s plan to deal with the cost of living crisis after a sharp rise in the energy price cap.

Ofgem confirmed that the price cap will hit a record £1,971 for a typical household as gas prices soared to unprecedented highs.

That means bills will soar by £693 per year for the average household from the beginning of April.

Here we take a look at the measures the Government will take to tackle the rise in energy bills.

What measures will the Government take over rising energy bills?

In a statement in the House of Commons, Mr Sunak outlined three measures the Government will take which will save millions of households £350 this year.

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Firstly, he said the Government will “spread the worst of the extra costs of this year’s energy price shock over time”.

He said all energy customers would receive a discount on their bills worth £200.

This money will be repaid from people’s bills in equal £40 installments over the next five years.

Secondly, the Chancellor announced a £150 council tax rebate in April for those in bands A to D. This discount will not have to be repaid.

He said 80% of all homes in England will benefit from the rebate in the spring.

Lastly, he announced a discretionary fund of £150m for local authorities.

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He said: “We will provide local authorities with a discretionary fund of nearly £150 million to help those lower income households who happen to live in higher council tax properties, and households in bands A to D who are exempt from council tax at all.”

The cost of the Government’s plan is around £9 billion.

What did Rishi Sunak say about the Government’s energy plan?

Mr Sunak said the Government will “step in” to help households directly manage “incredibly tough” energy costs.

The Chancellor said: “The energy regular Ofgem announced this morning that the energy price cap will rise in April to £1,971, an increase of £693 for the average household.

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“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.”

He added: “The price cap has meant that the impact of soaring gas prices has so far fallen predominantly on energy companies, so much so that some suppliers who could not afford to meet those extra costs have gone out of business as a result.

“It is not sustainable to keep holding the price of energy artificially low. For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.

“But what we can do is take the sting out of a significant price shock for millions of families by making sure the increase in prices is smaller initially and spread over a longer period.”

What Labour said about the Government’s plan on rising energy prices

Shadow chancellor Rachel Reeves said millions of people are cutting back spending to pay bills.

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She told the Commons: “What do the Government offer? A buy now, pay later scheme that loads up costs for tomorrow.

“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 added: “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?

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