The government announced a further £200 reduction in energy bills for the majority of households, to be delivered from October 2022 through the Energy Bills Support Scheme1. The measure formed part of the immediate support set out alongside the British Energy Security Strategy, published on 6 April 2022, which the government described as a plan to boost long-term energy independence, security and prosperity1.
The £200 reduction was one element of a package the government put at £9 billion for consumers facing the rising cost of living, which also included a £150 council tax rebate from April 20221. The strategy document stated that the £200 reduction would apply to all households in Great Britain through the Energy Bills Support Scheme, and that the Warm Home Discount would rise to £150 in October while extending its coverage to assist three million people2. A parliamentary committee response recorded that from October 2022 the scheme would reduce all domestic electricity customers' bills by £200, and that the sum would subsequently be recouped through energy bills over five years from 2023/243.
The strategy set out longer-term commitments intended to reduce exposure to international gas prices. These included an ambition of up to 50GW of offshore wind by 2030, of which up to 5GW would come from floating offshore wind, and planning reforms to cut approval times for new offshore wind farms from four years to one1. On nuclear, the government set an ambition of up to 24GW by 2050, which it said would represent up to around 25% of projected electricity demand, and committed to setting up a new body, Great British Nuclear, immediately1. A £120 million Future Nuclear Enabling Fund was to be launched in April 20221.
On home heating, the strategy confirmed a temporary VAT cut on the installation of energy efficiency projects such as solar panels, insulation and heat pumps, in place for five years to 20271. The strategy document described this as zero-rating VAT for the next five years on the installation of energy saving materials, including insulation and low carbon heating2. It also set a 2035 date by which the government intended to phase out the sale of new and replacement gas boilers2, and committed to expanding the Energy Company Obligation to £1 billion per year from 2022 to 20262.
"a further £200 energy bill reduction in October"
| Measure | Figure | Date |
|---|---|---|
| Energy bill reduction (Energy Bills Support Scheme) | £200 | October 20221 |
| Council tax rebate | £150 | April 20221 |
| Warm Home Discount | £150 | October2 |
| Energy Company Obligation | £1 billion per year | 2022 to 20262 |
| Boiler Upgrade Scheme | £450 million | 20222 |
Why it matters for households
The £200 reduction was a flat sum applied to domestic electricity bills rather than a change to unit rates, so it reduced the total owed rather than the price of each unit of energy used. Because the sum was to be recovered through bills over five years from 2023/243, the immediate reduction in October 2022 was followed by a period in which that support is repaid. For a household, the practical effect on a single winter's bills was therefore different from the effect across the following years.
The strategy framed its longer-term measures as a route to lower bills by reducing dependence on gas whose price is set in international markets1. The government said consumer bills would be lower this decade than they otherwise would be as a result of the measures taken1. It also stated that without the renewables already on the grid and the green levies that support them, energy bills would be higher than they are now2. The strategy did not set out a figure for the bill reduction attributable to any individual measure beyond the £200 and the £300 average saving it associated with energy efficiency upgrades to over half a million homes1.
For a home's energy independence, the measures with direct household application were the VAT cut on installing energy saving materials such as insulation and heat pumps1, the Boiler Upgrade Scheme worth £450 million2, and the Energy Company Obligation expansion2. The strategy also consulted on partnerships with communities hosting new onshore wind in return for guaranteed lower energy bills1. The government said it aimed for low carbon heating systems to be no more expensive to buy and run than existing natural gas systems by 20304.
What happens next
The strategy listed several dated commitments. A licensing round for new North Sea oil and gas projects was planned to launch in autumn 20221, with the next round a year earlier in March 20232. The government planned to blend up to 20 per cent hydrogen into the natural gas grid and take a final decision by the end of 20232. It committed to phasing out the use of Russian oil and coal by the end of 20222. A comprehensive Energy Advice Service was to launch on GOV.UK by summer 20222. Strategic decisions on the role for hydrogen in the heat system were scheduled for 2026, with critical trials of hydrogen for heat at neighbourhood and village scale in 2023 and 2025 respectively4.
Sources4 cited
- Major acceleration of homegrown power in Britain’s plan for greater energy independence - GOV.UK, gov.uk
- British Energy Security Strategy, data.parliament.uk
- Decarbonising heat in homes: Government Response to the Committee’s Seventh Report of 2021–22 - Business, Energy and Industrial Strategy Committee, publications.parliament.uk
- Decarbonising heat in homes: Government Response to the Committee's Seventh Report of 2021-22, committees.parliament.uk