Energy bills and council tax rebate: Government's £350 scheme explained as Lancashire families battle cost of living crisis

The Government’s newly-announced Energy Bill Rebate was rolled out on Thursday to try and “cushion the blow” of rising energy costs – which will be coupled with a 7.25% increase in inflation in April.

By Adam Lord
Friday, 4th February 2022, 11:54 am

The £9 billion package will provide each family with £350 which will include a one-off repayable £200 discount and a £150 rebate on council tax bills.

At a press conference on Thursday, Chancellor Rishi Sunak made the announcement following word from Ofgem, the energy regulator, that prices are set to soar by 54% for 22 million households from the beginning of April, adding £693 to the annual costs of a typical household.

How will the £200 discount on bills work?

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Rishi Sunak has announced plans to try and combat the cost of living crisis

Details of the Chancellor’s £200 rebate, coming in October, will be worked through following a consultation, but households will have to repay the cash with bill hikes of £40 per year over the five years from 2023.

Ministers are hopeful that wholesale energy prices will drop so households can pay back what they owe without a major rise in bills.

Some energy company insiders worry that the policy is too reliant on falls in global gas prices, after investment bank Goldman Sachs previously warned prices are likely to remain at twice their usual levels until 2025.

Who will be covered by the £150 council tax rebate?

Mr Sunak’s £150 council tax rebate, due in April, will cover homes in bands A to D, impacting 80% of households in England, he said.

According to our Data Team, the £150 rebate is therefore available to 54,297 homes in Preston. That’s 26,399 in band A properties, 11,806 in band B, 9.503 in band C and 6,589 in band D.

In Chorley, 41,898 properties are eligible, with the rebate available to a further 42,543 homes in South Ribble.

The Resolution Foundation has however pointed out that more than one in 10 of the poorest households in England – 640,000 in total – live in Band E+ properties and therefore will not be entitled to a £150 rebate on council tax bills.

Just how hard will households be hit in the coming months amid a cost of living crisis?

Disposable incomes will fall by around 2%, according to estimates, the worst impact since records began in 1990.

Increased energy bills, even with the new support from the Government, will push four million households into fuel poverty – double the current amount, according to the Resolution Foundation think tank.

The squeeze comes as oil giant Shell revealed a 14-fold increase in profits as the company benefited from the spike in global prices.

Ofgem was forced to hike the energy price cap to a record £1,971 for a typical household on a standard tariff as gas prices soared to unprecedented highs.

For customers with prepayment meters the price cap will go up by £708 to £2,017, the regulator added.

What the Chancellor has said

Writing in The Sun, Mr Sunak explained: “Four out of five families will get £150 in April as a discount to their council tax bills — so cash is there in your bank account straight away to help with the rise in cost.

“Then, in the autumn, everyone will get £200 off their energy bills that will be repayable over the course of five years.

“We have done it in this way to ensure that help is targeted at those who need it most, while also providing some support for those in the squeezed middle — the local schoolteacher, hospital nurse or police officer — who will be feeling the pinch too.”

Following the announcement on Thursday, Prime Minister Boris Johnson defended the measures as a “mega package”, adding: “I don’t think we have seen anything like it in recent memory.”

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