On Thursday - November 17 - Jeremy Hunt announced that the Government will increase the energy price guarantee.
The increase will see a typical household's yearly bill raise from £2,500 to £3,000, a 20 per cent rise. As things stand the guarantee saves the average household £1049, with an additional saving of at least £400 due to the flat rate energy payment paid to every household in the country.
The new rate will see households paying more for their bill, with no set payment of £400 to be given. Instead, support will be provided on a means-tested basis. The Cost of Living Payment will be paid to those on specific benefits (£900), pensioners (£300), and people with disabilities (£150). Here is some more information of how the new plans will work for you.
READ MORE: Energy price cap increase as Glasgow households set for even higher bills
How long does the energy price guarantee last?
The initial guarantee was introduced by the Government for two years - which would take us to October 2024. However, the support was since scaled back and will instead only last for six months in its current form - taking us through to April 2023.
But now the Government have announced plans to keep an energy guarantee in place until April 2024, but at a higher cost that current rates.
How much money will the new energy price guarantee save me?
The guarantee will save an average household around £700 per year if current Ofgem price cap estimates are correct. The regulator estimates that a typical household bill would be £3,702 per year in April 2023 if no Government scheme was in place.
However, we are still in the early of that calculation period, with figure fluctuation possible in the coming weeks and months.
Is there a maximum energy bill cost?
The simple answer is no. There is no maximum amount that you could be paying for your energy.
The £2,500 guarantee - which will soon be the £3,000 guarantee - is based on a typical household's yearly use.
This is based on standard tariffs across the country - with 85 per cent on homes on these - that have a maximum daily fee and set cost per energy unit that providers can charge. So, use more, pay more.
Who is eligible for the Cost of Living Payment next year?
People on specific benefits
More than eight million households across the UK who are currently on means tested benefits will receive the additional support payment on £900 in 2023-24.
This includes all households receiving the following benefits:
- Universal Credit
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Income Support
- Pension Credit
- Working Tax Credit
- Child Tax Credit
The payments will be made in one instalment, with DWP and HMRC to provide further detail in due course.
The payment will be tax-free and will not count towards the benefit cap. It will not have any impact on existing benefit awards.
Pensioners
Pensioners will also be eligible for extra support in the shape of £300.
This payment is in addition to the means tested benefit and disability payment - if eligible - which means a person could be entitled to £1050 in total.
DWP will provide further detail on timing of the payments and eligibility dates in due course. This payment will be tax-free and will not have any impact on existing benefit awards.
People with disabilities
People who receive non-means tested disability benefit will receive a further £150 Disability Cost of Living Payment in 2023-24, to help with any additional costs they face.
This is in addition to the Cost of Living Payments for households on means tested benefits and pensioner households, if eligible.
This includes everyone eligible for:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
Again, the payment is tax free and will not impact any other benefit payment.
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