Every home in England, Scotland and Wales will get £400 off their energy bills as part of plans to tackle the cost of living crisis, Rishi Sunak has confirmed.
The new support - available to 28million households - comes instead of the £200 energy discount people were due to receive from October.
The £200 discount had been much-criticised and labelled as a "loan" as the money would’ve needed to be paid back.
The Chancellor today confirmed he will turn the £200 “loan” into a grant - meaning struggling households will not need to repay it.
Mr Sunak will also increase the amount you’ll get off your bill by an extra £200, taking the total discount to £400.
He confirmed the new £400 payments this afternoon in the House of Commons, as part of a wider £15billion cost of living package partly funded by a new windfall tax on energy firms.
But the new support is still only half of the £800 the boss of Ofgem warned its price cap will increase to this October.
The price cap for those on default tariffs paying by direct debit increased by £693 from £1,277 to £1,971 last month.
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Jonathan Brearley, the chief executive of Ofgem, warned this could rise to £2,800 in October.
The price cap covers around 22million households and is linked to wholesale energy costs, which are going up due to global supply issues and the war in Ukraine.
Households are also feeling the pinch from record high petrol costs, more expensive food in the supermarkets and soaring inflation.
The UK rate of inflation has now hit 9% - a new 40-year high - as the cost of living continues to spiral.
How the £400 payment will work explained
The idea of the original £200 discount was that energy companies were to be loaned the cash by the Government.
Their customers would then have to repay the money at a rate of £40 per year over five years from 2023 to 2027, through a new levy added to energy bills.
MoneySavingExpert Martin Lewis had previously called out the Government for not describing the cash as a loan, and criticised the fact that households could not opt out of the scheme.
The new £400 payment won't have to be paid back and will still be available to every UK household, spread over six months from October.
Rather than a cash payment, the money will be applied directly to your energy account.
Direct debit and credit customers will have the money credited to their account, while those with pre-payment meters will have the money added to their meter or paid via a voucher.
Support to people in Northern Ireland is expected to be announced in due course.
