New research from National Energy Action (NEA) suggests that one in three UK households could fall into fuel poverty if the latest estimates that the average gas and electricity bills could reach £3,245 per year become a reality. Experts at Cornwall Insight recently said bills could rise from a current record of £1,971, to £3,245 in October and may increase even further to £3,364 at the start of next year.
Ofgem will announce the next energy price cap hike near the end of August, however, despite the UK Government’s plans to apply a £400 rebate to all domestic electricity accounts across the country to offset the increase, NEA predicts it won’t be enough to stop 8.2 million households being plunged into fuel poverty - defined as homes spending more than 10% of total income on energy.
NEA chief executive Adam Scorer said: "Current financial support will be inadequate as much of that money will be spent before winter kicks in. Energy bills are already unaffordable for millions, and millions more are set to suffer.”
He continued: “People will be forced into impossible situations - choosing between heating and eating, forced into spiralling debt, and putting their emotional and physical health at significant risk.”
Help with soaring energy bills
Some 28 million households across the UK with a direct domestic electricity contract with their supplier are set to receive a £400 rebate through an expansion of the Energy Bills Support Scheme.
Essentially this means if you pay your supplier directly for your electricity either by standard payment methods or through a prepayment or smart meter, you will qualify for the financial support.
The reason it is based on the electricity connection is because not everyone has a gas supply, however, the rebate is intended to be deducted from your overall energy account.
The £400 will be paid directly to your supplier who will deduct it from your bill over a six-month period starting in October - the equivalent to a £66 reduction each month.
Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
This support will apply directly for households in Scotland, England and Wales
Below is everything you need to know about the £400 energy grant which has been published in new guidance on the GOV.UK website here.
It’s worth noting that a technical consultation into how energy firms will deliver the rebate is due to be published over the summer. This is expected to include details for those who pay their electricity bills directly to their landlord and those in mobile/park homes.
What is the Energy Bills Support Scheme?
The UK Government is providing a package of support worth £37 billion in 2022 to 2023 which includes the Energy Bills Support Scheme.
Through the Scheme, domestic electricity customers across the UK will receive a £400 grant which will appear as a credit from energy suppliers from October 2022 onwards - the guidance on GOV.UK states that this will not need to be repaid.
Will I be eligible for the Energy Bills Support Scheme?
All households with a domestic electricity connection will be automatically eligible for the £400 grant. There is no need to contact energy suppliers concerning the rebate.
Do I need to apply for the £400 support scheme?
No.
The guidance states: "Households will not need to apply for the Scheme, and in most cases we expect electricity suppliers to apply the reduction automatically to bills from October 2022.
"We are working hard to design the delivery of this and there may be some variations in how consumers receive the benefit, depending on how they pay for their energy, for example whether by direct debit or through a prepayment meter. However, all households with a domestic electricity meter should receive the £400 reduction."
Is the £400 a loan?
No - this is a grant and will not need to repaid.
The earlier policy to recoup the payment has been cancelled following a further analysis of the sustained high energy prices and input received. by spreading some of the costs over a few years, so they are more manageable for households.
When will more clarity on the design and delivery of the £200 credit be available?
The UK Government explained: “We are working on the specifics of delivery and are actively engaging with energy suppliers, consumer groups and Ofgem to ensure that delivering this grant is as simple and efficient as possible.
"A consultation on the Scheme concluded on May 23. Responses are being analysed and the government response will be published later in the summer."
Is the scheme UK-wide?
The payment through energy bills will apply across Scotland, England and Wales. Energy policy is devolved in Northern Ireland.
The Northern Ireland Executive will be funded to provide comparable support with around £150 million through the Barnett formula in the financial year 2022 to 2023.
I am on a non-smart pre-payment meter, will I get the £400?
Yes.
Previous schemes have used vouchers to reach those on prepayment meters and the UK Government will ensure that households whose energy is managed in this way will receive the grant.
If I live in a park home, will I get the £400? Or if I pay for energy in my rent, how do I make sure my landlord passes on the reduction?
The UK Government said: “We recognise that there are certain situations where a third party will be responsible for the bill (and be named on it). In these situations, any charges should then be passed onto the end user, typically through all-inclusive rent (landlord or tenant) or ‘pitch’ charges (for example park homes).
"We are exploring this issue as we continue to develop the policy and we have gathered more evidence through the consultation."
What if I change payment method or tariff, or if my energy supplier goes bust?
The UK Government said: "We are still designing the scheme but will ensure that customers who switch payment methods, or whose energy suppliers fail, will not be penalised."
What if I move house or switch supplier?
All suppliers will be applying the reduction to bills from October 2022.
Why does the support not fully cover the increased cost of the energy price cap?
This scheme will help over 28 million households with the increased costs of global energy prices.
When will we be informed on the final details and design of the scheme?
The guidance states: "The fundamental elements of the Scheme are fixed, and we are now working to design the detail of implementation and delivery.
"The UK Government response to its recent consultation on the scheme is expected to be published in the Summer."
Read the full Energy Bills Support Scheme explainer on the GOV.UK website, here.
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