energy payment, USA News (UK): The Chancellor has delivered a Budget promising “breathing space” for households, announcing measures he says are set to cut energy bills “for good”. Here we take a look at the key measures intended to help homes manage the rising cost of energy.
John Healey unveiled a new household bill payment for millions of households as he shared his Budget on Wednesday. Healey said the conflict in the Middle East has driven up energy bills and he recognised this was a “real worry” for households. “This winter, for 20 million households in council tax bands A to D, I’m announcing a £100 energy payment for households paid directly into people’s bank accounts to deal with rising energy bills. That’s a £2.6bn scheme to take the pressure off in the coldest months and see people through to the spring,” he said. The policy is set to help around 20 million households – roughly 70 per cent of all residential properties – containing 45 to 50 million individuals who are in council tax bands A to D.
Kevin Mountford, personal finance expert and co-founder of online savings marketplace Raisin UK, said the £100 payment should provide the greatest financial relief to eligible households with the least money to spare, even though the cash amount is the same regardless of income. He added that council tax bands are a blunt measure of financial need, noting that someone in a band E property may have a low income while someone in band A to D may be comfortably off.
Green levies removed from energy bills
The Chancellor announced he is “putting an end” to policy costs being loaded on to household bills through levies. Healey outlined plans in his Budget to axe additional green levies from household energy bills and put the costs into general taxation. Levies currently make up to 18 per cent of electricity bills and 7 per cent of gas bills. The Chancellor said he will scrap the upcoming gas shippers’ obligation, a green levy to fund hydrogen projects, and instead back those projects directly from government.
Nigel Pocklington, CEO of Good Energy, welcomed the decision to move policy costs off energy bills and into general taxation, though the renewable electricity supplier wanted the Government to go further and move policy costs currently loaded on to electricity bills too.
Cutting standing charges
Standing charges on gas bills will be scrapped from 2027, Healey has confirmed. The charges, a fixed daily fee applied simply for the facility of having gas which are not based on how much gas is used, cost a typical household £108 per year. Martin Lewis, founder of Money Saving Expert, said he was very pleased to hear that standing charges will be cut, estimating that shifting the cost to unit rates would translate to just under 1p per kWh.
VAT cut extension
Healey announced an extension to the VAT cut on household electricity bills until July. He told the Commons that extending the VAT cut through the winter and spring to July takes £50 off the annual price cap. Around 29 million domestic electricity customers in England, Scotland and Wales will qualify for the rebate without needing to take any action.
