Rishi Sunak will give a major announcement today on how he plans to tackle soaring energy bills - amid reports millions will get a council tax rebate.
The Chancellor will make an intervention within minutes of Ofgem announcing the price cap on bills will soar by the biggest ever amount from April 1.
The regulator is set to add as much as £700 a year overnight to millions of British families’ annual bills - pushing a quarter of households into fuel poverty.
Mr Sunak will announce measures to tackle the rise, first in a House of Commons statement - probably at 11.30am - and then in a 5pm press conference.
According to The Times, he will announce households in council tax bands A to C will get rebates funded by government grants.
He could also announce separate £200 rebates to be given to all homes directly by energy firms, funded by state-backed loans.
But there are fears whatever he announces will not make up for the huge rise in bills, which could skyrocket from £1,277 to nearly £2,000 a year.
Council tax bills are also set to rise by at least 3% for millions of families in England from April 1, which means any rebate will have to cancel that out before families see a benefit.
The price cap on household energy bills shot up by £139 in October, and £151 for those on pre-payment meters - who are often the poorest families.
But all that could be left in the dust by the next price cap rise announced today.
Wholesale gas prices have skyrocketed, leading to the failure of more than two dozen suppliers, and the price cap will have to rise further to save remaining firms from collapse.
A £600 hike would mean for the poorest tenth of households, gas and electricity bills take up 12% of all their spending - a rise from 8.5%.
Boris Johnson is under vast pressure to ease the cost-of-living crisis, with his leadership under threat over No10 parties.
Also on Thursday, the Bank of England is widely expected to raise interest rates from 0.25% to 0.5% in a move that will push up the cost of mortgages.
In April families will see several cost-of-living hits at the same time including:
- The energy bills rise, estimated at around £700 per year
- Rising inflation making food more expensive in the shops
- Rising interest rates making mortgage repayments more expensive
- Council Tax rises at a standard level of 3%
- A National Insurance rise from 12% to 13.25%
- A freeze in the student loans repayment threshold
- A 3.8% rise in rail fares (in March)
Foreign Office minister James Cleverly said the crisis in Ukraine was partly to blame for soaring energy bills.
Mr Cleverly told Times Radio: “The situation in Ukraine has played a part in what has been a global increase in wholesale gas prices and that’s had a knock on effect through the supply chain right through to the energy companies in the UK and ultimately to people’s bills.”
He said the Government already had targeted support in place for pensioners and lower-income families and had increased the minimum wage.
But he added: “My understanding is the Chancellor will be making further statements later on, we absolutely recognise the pressure this puts on some families and so that’s why both our general support and our targeted support is so important and that’s why I’m very, very proud we put those support packages in place.”
