The government has announced that every household in the UK is to receive a £400 discount on their energy bills in October.
Almost 8m of the country’s most vulnerable households will also get a one-off £650 cost of living payment, Chancellor Rishi Sunak said. It comes as part of a £15bn support package aimed at helping people on low incomes deal with soaring prices - with extra help also available for pensioners and the disabled.
To help pay for the package, Mr Sunak announced a 25% windfall tax - or ‘Energy Profits Levy’ - on oil and gas companies, which have seen ‘extraordinary profits’ recently. The move comes a week after Tory MPs were whipped to vote against Labour’s windfall tax proposal and a day after Sue Gray's critical report into the lockdown-breaking parties at Downing Street.
Read more: UK households to get extra £200 to help towards energy bills as government announces new support
Mr Sunak said: “We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills. We have a collective responsibility to help those who are paying the highest price for the high inflation we face.
“That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.
“It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support.”
How will the £400 energy bill grant for all households be paid?
In February, Mr Sunak announced a repayable £200 loan for October to help people with their energy bills. This has now been doubled to £400, while the requirement to pay it back will be scrapped.
The government says: “Energy suppliers will deliver this support to households with a domestic electricity meter over six months from October. Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher."
The support will apply directly for households in England, Scotland, and Wales. Equivalent support will be given to people in Northern Ireland.
Am I eligible for the £650 cost of living payment?
The one-off £650 payment is available to more than 8m low-income households on the following means-tested benefits:
Universal Credit
Income-based Jobseekers Allowance
Income-related Employment and Support Allowance
Income Support
Working Tax Credit
Child Tax Credit
Pension Credit
The Department for Work and Pensions (DWP) will make the payment in two lump sums – the first from July, the second in the autumn. Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.
The government says: “Claimants will need to be in receipt of one of the above benefits, or have begun a claim which is later successful, as of 25 May 2022 to be eligible for the first of the two instalments. HMRC and DWP will provide further guidance, and the government will set out the eligibility date for the second instalment, in due course.
“This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.”
How are the one-off payments to pensioners and disabled people to be paid?
Mr Sunak also announced separate, one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups described as being the ‘most vulnerable to rising prices’.
This £300 payment will go to the over 8m pensioner households across the UK who receive the Winter Fuel Payment. It will be paid on top of any other one-off support a pensioner household is entitled to, for example where they are on pension credit or receive disability benefits.
All pensioner households will get the one-off pensioner cost of living payment as a top-up to their annual Winter Fuel Payment in November/December. For most pensioner households, this will be paid by direct debit.
Meanwhile, the £150 payment is for people across the UK who receive the following disability benefits:
Disability Living Allowance
Personal Independence Payment
Attendance Allowance
Scottish Disability Benefits
Armed Forces Independence Payment
Constant Attendance Allowance
War Pension Mobility Supplement
Claimants must be in receipt of, or have begun an eventually successful claim for, one of these benefits as of 25 May 2022 to be eligible for this additional payment. For the many disability benefit recipients who receive means tested benefits, this £150 will come on top of the £650 they will receive separately.
The government will make this payment directly to eligible people across the UK in September.
