The Chancellor announced a further £500 million for the Household Support Fund, bringing total funding for the scheme to £1 billion since October 20211. The fund had been launched on 30 September 2021 as a £500 million support fund for vulnerable households, covering the period 6 October 2021 to 31 March 20222. The March 2022 extension ran the fund to 30 September 20222.
The Household Support Fund was distributed by councils in England to directly help those who needed it most, through small payments to support vulnerable households meet daily needs such as food, clothing, and utilities2. It applies to England2. The same Spring Statement also cut VAT on key energy-saving home improvements from 5% to zero for five years, applying to products such as solar panels, heat pumps and roof insulation, effective from April 20221. The Treasury clarified at the time that the 0% VAT rate applies to both materials and the cost of installation, but may not apply to DIY purchases of insulation by householders1.
The two measures were directed at different groups. The fund was intended to help vulnerable households cover essential costs including utilities1, while the VAT cut was aimed at households able to invest in energy-saving upgrades. Critics said the VAT changes did little to support those in fuel poverty, or those unable to afford the upfront cost of measures like heat pumps and solar panels1. One commentator quoted at the time said the energy measures were limited and would not impact the majority of households, who would see a likely £1,300 average increase in year-on-year bills by October1.
"Sunak also announced a further £500 million for the Household Support Fund, intended to help vulnerable households cover essential costs including utilities, bringing total funding for that scheme to £1 billion since October 2021."
| Measure | Detail | Start |
|---|---|---|
| Household Support Fund extension | £500 million additional; £1 billion total since October 2021 | Announced March 2022 |
| VAT on energy-saving home improvements | Cut from 5% to zero for five years | April 2022 |
Why it matters for households
The Household Support Fund reached homes through councils rather than through the energy supplier or the tax system, so a household's access depended on where it lived and on its local authority's scheme. The guidance states that households in need of support should contact their local council to find out more information and apply for the fund2. Payments were small and were made to meet daily needs including utilities2, which means the fund could cover a bill or a top-up rather than a permanent change to a home's running costs.
The VAT cut worked differently. It reduced the cost of buying and installing measures such as insulation, heat pumps and solar panels, but only for households already able to fund the work, and the Treasury's clarification left DIY purchases of insulation potentially outside the zero rate1. For a home's energy independence, the two measures sit at opposite ends: one is short-term help with a bill, the other lowers the price of reducing a home's demand for energy over the long term. The fund's own guidance does not describe the payments as funding for energy efficiency measures, and no figure for how much of the £500 million went to utilities rather than food or clothing has been reported2.
What happens next
The extension announced in March 2022 ran the fund to 30 September 20222. The same guidance records that on 26 May 2022 the government announced a further extension, to 31 March 2023, with an additional £500 million, of which the devolved governments were to receive up to £79 million through the Barnett formula: £41 million for the Scottish Government, £25 million for the Welsh Government and £14 million for the Northern Ireland Executive2. It states that it is for the devolved governments to decide how to allocate this additional funding2. The zero rate of VAT on the listed energy-saving measures was set to run for five years from April 20221.