Global energy prices are increasing at a rapid rate.
79% of UK households will have to pay around £529 more for gas and electricity from October 2022 to October 2024 – on top of the previous energy price cap increase of 54%.
Welfare charities and experts have said these prices will push many more people into fuel poverty.
After mounting pressure from political parties, charities, and the general public, the government has decided to step in by releasing a financial support package – but is it enough?
What’s on this page?
Government financial support during the energy crisis
Over the course of 2022, the government has discussed a few different ways it could financially support people during the energy crisis.
In April, Chancellor Rishi Sunak announced a £150 council tax rebate.
Sunak also proposed the idea of introducing a £200 loan, which would help households afford bills, but would mean they’d eventually have to pay it back through higher bills in the future. This idea has since been scrapped, after wide criticism.
Instead, Sunak has introduced a new financial support package, which will be worth double the amount of the loan, at £400, and won’t have to be paid back.
This £15-billion package has been funded by a windfall tax – also known as the temporary Energy Profits Levy – on oil and gas giants.
The public doesn’t think this is enough, according to our National Home Energy Survey. 76% of British people think the government has fallen short when it comes to supporting them with energy bills.
What’s included in the Cost of Living Support package?
The government’s new Cost of Living Support package is available for all UK households, and also offers additional support for vulnerable groups.
Want to see how much support your household will receive? We’ve outlined everything you need to know about the Cost of Living Support package below.
Support for all UK households
As part of the new Cost of Living Support package, all households in England, Scotland, and Wales will receive £400 to help them afford rising energy bills. As it stands, people in Northern Ireland need to wait before they find out whether they’ll receive the payment.
Unlike the Chancellor’s original plan, this £400 payment will be as a grant, which means households won’t have to pay it back through higher bills in the future.
The payment will be delivered over the course of six months – starting in October. Direct debit and credit customers will have the money credited to their accounts. Customers with pre-payment meters, on the other hand, will have the money applied to their meter or paid through a voucher.
Support for low-income households
As well as receiving the standard £400 grant, low-income people will be able to get a one-off £650 payment.
Anyone with one of the following means-tested benefits will be eligible for the grant:
- Universal Credit
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Income Support
- Working Tax Credit
- Child Tax Credit
- Pension Credit
If you’ve applied for one of these benefits before 25th May 2022, and it gets approved further down the line, you’ll also qualify for the grant.
The Department for Work and Pensions (DWP) will make the payment in two lump sums – the first from July, and the second one “in the autumn”.
Support for pensioners
As well as receiving the standard £400 grant, UK pensioners will be able to get a one-off £300 payment.
Anyone who’s the state pension age of 66 or above (as of 19–25 September 2022) will be eligible for the payment – amounting to almost 8 million pensioners across the UK.
This Pensioner Cost of Living Payment will act as a top-up to your annual Winter Fuel Payment in November and December.
Support for disabled households
To help people with disabilities afford specialist equipment, specific food, and increased transport costs, the government is offering a £150 Disability Cost of Living Payment, which will be an add-on to the standard £400 grant.
Anyone receiving the following disability benefits will be eligible for the one-off payment:
- Disability Living Allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
The government is also keen to point out that many disability benefit recipients will also receive the £650 grant.
Cost of Living Support package summary
All UK households – £400
Lowest income households – £650
Pensioners – £300
Disabled households – £150
Why is the government offering financial support?
The recent energy crisis is pushing millions of people into fuel poverty – and it’ll be bad for a while.
The 12-month inflation rates for gas and electricity are at their highest level since early 2009 – with gas at 28.1% and electricity at 18.8%.
This has led the government to freeze the typical household energy bill at £2,500 from October.
For six months, while all UK households receive their £400 grants, you’ll only pay 6.5% more than you were previously – but after that, you’ll be paying 27% more.
These sky-high energy prices also have a knock-on effect on the cost of food and other goods, which have pushed general inflation rates to a 40-year high.
The reasons behind all of this? It comes down to Russia’s invasion of Ukraine, the UK’s lack of gas storage, long winters, and our usual suppliers suffering.
A recent government announcement states that, despite the original plan, the EPG will be increasing in April 2023. Want to find out how much you could be spending on energy soon? Check out our page: How Much Are Energy Bills Going Up In April 2023?
Is the Cost of Living Support package enough?
While some people are happy with this package, others still have a bone to pick with Sunak.
Like many people around the country, the director of the Institute for Fiscal Studies, Paul Johnson, said the support was a “genuinely big package”.
However, many people have criticised the Chancellor for giving this grant to everyone – even the top earners in the UK. Naga Munchetty from BBC Breakfast asked Sunak: “Does it feel right to you that someone in your financial position receives a £400 grant, or someone with a second home receives two lots of £400 grants?”
Many environmental charities have also voiced their concerns over the new grant system.
Ami McCarthy, a political campaigner for Greenpeace UK, stated: “While providing support to millions struggling with sky-high energy bills is 100% the right thing to do, by only skimming the top 25% off oil and gas company profits, Sunak has missed a huge opportunity to tackle the root cause of the cost of living crisis and the climate crisis together.”
Although a windfall tax has been implemented on gas and oil giants, there hasn’t been enough support to fix the source of the problem: the UK’s leaky homes and its reliance on fossil fuels.
As Mike Childs, head of policy at Friends of the Earth, puts it: “Green power and energy efficiency are the real solutions.”
Summary
After a slew of disappointing government announcements – including minimal financial help and proposed loans – the Cost of Living Support package has mostly been welcomed with open arms.
However, there are still lingering questions.
The grant is excellent news, but energy prices will only continue to worsen until we move away from fossil fuels and ramp up renewable energy in the UK. There’s only a limited amount of oil and gas to rely on – the later we leave it, the pricier it’ll become.
