A University of Bath economist says the government's attempts to tackle the cost of living crisis are motivated by politics, not economics.
Professor Chris Martin said the plan is politically motivated as it doesn't efficiently target the poorest and also favours older people over younger people.
His comments follow Money Saving Expert, Martin Lewis, calling on the Chancellor to "urgently rethink" the compulsory £200 energy scheme.
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Last week the government revealed plans to give households in council tax bands A to D a £150 rebate, as well as forcing energy companies to discount October's bills by £200 - only to recoup the money in the following five years in £40 instalments.
Speaking to Bristol Live, Professor Chris Martin said the plan is politically motivated as it doesn't efficiently target the poorest and also favours older people over younger people. He said: "You need to be very, very clear who it is you're trying to benefit. So if you're trying to benefit the poor, then the best single best way of doing that is to increase Universal Credit.
"However, there are big political constraints there. Because .... a temporary increase in Universal Credit is very difficult to engineer - there's a lot of pressure, once Universal Credit increases, to keep it high.
"From a more political perspective, not an economic perspective, then spreading the benefits across more households is an attractive thing to do."
Asked if he therefore meant the government took this decision for political reasons rather than economic, Martin replied: "Almost certainly, yeah.
"And with the way it's been done, there are inter-generational issues. Younger people are more likely to rent, [so] doing things through council tax and repayments through energy bills is more problematic for renters. Therefore, it's a route which is better in lots of ways for older people than younger people."
People who currently live in a house-share or live with parents will lose out under the scheme, since their £200 discount in October will be shared among multiple people. If they then move in to their own home in the next five years, their bills will still go up by £40 per year each. People who pay rent with bills included also could lose out, since there is also no obligation on landlords to pass the discounts on to tenants.
Martin Lewis, the self-styled Money Saving Expert, today launched a campaign to force the government to drop the energy bill discount scheme. He cites polling showing the majority of people would prefer to opt-out, even though they cannot do so, and says "the chancellor is effectively taking a worrying gamble with people’s finances".
The YouGov poll spoke to 1,665 adults and found that 57 per cent of those responsible for energy bills would decline the cash rebate, which Mr Lewis has called a "loan-not-loan" scheme.
Keir Starmer, the Labour leader, branded the government's energy discount "a con". He said: "It is a buy now, pay later scheme. A dodgy loan." His party's alternative idea is to introduce a windfall tax on oil and gas producers such as Shell and BP - who are recording huge increases in profits thanks to the higher wholesale prices. It says it would then use the money to cut VAT off everybody's energy bill and target further help at the poorest. Prof Martin says he would advise the government to choose this plan, despite its own flaws.
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"I would be going with the windfall tax, simply because this is hopefully a fairly unusual and fairly extreme event," he said. "So I'd be going for the idea of a windfall tax, the idea being that you tax energy companies more when energy prices are high ... [and] you tax them less when energy prices are lower."
He said a one-off windfall tax of 10 per cent "would raise possibly close to £1 billion, which if used to bring down energy bills - particularly if it was focused among the less well paid households - would make a significant difference".
Speaking last week, Rishi Sunak said he knew 'one issue on people’s minds is the rising cost of living'.
He said: "That’s why the Government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.
"We stood behind British people and businesses throughout the pandemic and it’s right we continue to do that as our economy recovers in the months ahead."
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