Chancellor Rishi Sunak announced new measures aimed at easing the cost of living crisis that will give households hundreds of pounds off their energy bills ahead of another jump in the price cap to £2,800 in October.
The chancellor has ditched the previously announced £200 loan on energy bills and replaced it with a £400 grant that will not have to be paid back. This means that every UK household will get an energy bill discount of £400 this October as part of a package of new measures to tackle soaring prices.
In addition, Sunak announced extra support for eight million of the country’s lowest income households, with those on means tested benefits set for a one off cost of living payment of £650.
The chancellor also announced more money for pensioners as those who receive the winter fuel payment who will get an extra one off payment of £300
There will also be an extra payment for 6 million people who receive non-means tested disability benefits who will receive a one off payment of £150.
Sunak said that as a result of previous and the new measures, the vast majority of households will receive £550, pensioners will receive £850 and almost all of the 8 million most vulnerable households in the country will in total receive support of £1,200.
The Loan-Not-Loan is thankfully now dead. It is now a grant coming off bills. And it is bigger. So now ALL energy bills will be reduced by a flat £400 this October. #CostOfLivingCrisis
— Martin Lewis (@MartinSLewis) May 26, 2022
The new payments will apply to the whole of the UK, including Northern Ireland.
The £10bn support package will be funded through a windfall tax on the profits of oil and gas companies, set to come into effect in the autumn.
Earlier this week the UK's energy regulator Ofgem said the typical household energy bill was set to rise by £800 in October, bringing the typical household bill to £2,800 a year. Bills had already risen on average by £700 in April.
Ofgem warned it meant 12 million households could be placed into fuel poverty.
Most people living in homes in England in council tax bands A-D have already received a £150 rebate on their bills.
The announcement comes a day after Sue Gray's report on lockdown-breaking parties in Downing Street was published, prompting critics to accuse the government of bringing forward the measures to distract from the fallout.
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