Chancellor Rishi Sunak announced an Energy Bills Rebate support package on 3 February 2022, in response to the increase to the Default Tariff Cap1. The package comprised an Energy Bills Discount of £200 for domestic electricity customers in Great Britain and a £150 council tax rebate for households in England in bands A to D1. The Chancellor also announced an expansion of the Warm Homes Discount Scheme at the same time1.
The announcement followed Ofgem's confirmation that the energy price cap would rise by 54% in April 2022, taking the average bill for direct debit and standard credit customers to £1,971, a £693 annual increase1. For the over 4.5 million customers on prepayment meters, the separate cap rose from £1,309 to £2,017, an increase of £7084. At the time, the Government proposed that customers would pay the £200 back through bills in later years1. Which? reported that the £200 would be recovered in £40 instalments over five years, beginning in 20235.
The council tax rebate was not means-tested, and was expected to benefit 80% of homes in England1. It was paid directly by local authorities from April 20221. Local authorities were given £144 million of discretionary funding to support people needing help with energy bills who were not eligible for the rebate1. The devolved administrations received around £715 million to provide comparable support, where UK Government support did not cover Scotland, Wales or Northern Ireland1. Which? reported that Scotland announced its own £150 rebate for 1.85 million households on 10 February, and Wales confirmed similar measures on 15 February5.
The package drew criticism from fuel poverty and research bodies. National Energy Action said the proposals were "woefully inadequate" and would not avert "devastation to health, wealth and wellbeing" for millions of the poorest households4. Its chief executive, Adam Scorer, said:
"We needed deep, targeted support for the most vulnerable. We have shallow, broad measures for all. That simply does not work."
CREDS argued the £350 support package covered only around half of the total increase in average energy bills, and noted that the same £9.1 billion could have funded loft and cavity wall insulation in 11.7 million homes2. The Resolution Foundation said cases of fuel stress, where energy bills exceed 10% of disposable income, would double to 5 million in April despite the measures6.
Why it matters for households
The rebate was structured as a flat amount per household rather than a payment scaled to income or to the energy performance of a home, so a low-income household in a draughty property received the same £200 as a wealthier one in an efficient home2. The £200 was also a loan in effect, recovered through future bills, which spreads the cost of the April 2022 increase over several years rather than removing it1. For prepayment meter customers, NEA calculated a gap of over £500 per year between the October 2021 and April 2022 increases and the new measures4. The price cap itself limits unit rates and standing charges rather than total bills, so the amount a household pays still depends on how much energy it uses3.
What happens next
The Government published an explainer on 1 April 2022 renaming the Energy Bills Discount the Energy Bills Support Scheme1. A consultation on technical proposals ran from 11 April to 23 May 2022, with the Government response published on 29 July 20221. On 26 May 2022 the Chancellor said the scheme would be doubled to £400 and provided as a non-repayable grant, paid in six monthly instalments from October 20221. Ofgem was expected to announce the next price cap level on 26 August 20221.
Sources6 cited
- Energy Bills Support Scheme: Government policy and FAQs - House of Commons Library, commonslibrary.parliament.uk
- The chancellor’s new help on energy costs will do nothing to tackle the root causes of the energy bills crisis – CREDS, creds.ac.uk
- Energy bills to rise by £693 for 22 million people in April 2022 - Which?, which.co.uk
- Energy Crisis | Government plans woefully inadequate says NEA, nea.org.uk
- Millions of households to get £350 boost to help with cost of living: are you eligible? - Which?, which.co.uk
- UK’s Sunak reveals £9bn plan to offset energy hike - Carbon Brief, carbonbrief.org