Rishi Sunak to cut energy bills by £400 with windfall tax on oil and gas firms amid cost of living crisis
26th May 2022

RISHI Sunak is set to give every household in Britain hundreds of pounds off their energy bill to help with the cost of living crisis.

The Chancellor, who is expected to announce the plans in the House of Commons today, could reportedly cut bills by £400 with a windfall tax on oil and gas firms.

He will scrap plans for a “rebate and clawback scheme”, which would have given people a £200 discount on their bills from October, The Times reports.

Mr Sunak will instead convert the effective loans – which would have been paid back in heftier bills later – into grants given to energy companies to dish out.

The Times reports the value of the discount could be increased to as much as £400, with no need to pay the sum back.

The plans, which could set the Government back £10billion, will form part of a “mix and match” package with a series of measures to help the most vulnerable cope with soaring energy bills as well as inflation.

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Ministers have been considering cutting council tax bills — beyond the £150 rebate for bands A to D already announced.

They are expected to hand out another council tax rebate as a quick and effective way to get cash into people’s pockets.

Universal Credit payments could increase as part of the rescue plan to help the most hard-up households.

Rates for the benefit could be increased in line with inflation now rather than Spring next year, according to reports.

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Inflation has rocketed to 9% piling pressure on household finances

However they have ruled out restoring the £20 universal credit uplift amid concerns that any increase will become permanent.

Mr Sunak and Boris Johnson have rejected plans to cut VAT on energy and fuel for now.

They are also yet to decide on potential cuts to VAT and income tax, set to be delayed until the Autumn Budget.

The latest support package is expected to partly be funded by a windfall tax on the excess profits of oil and gas companies, likely to come into effect in the autumn.

A government source says the measures will be “temporary and targeted”.

It comes after energy regulator Ofgem warned household energy bills will soar by another £800 in October, to £2,800.

The huge hike means even with Government help, families will be left pinching their pockets.

Boris Johnson today admitted Britain was in a “very difficult fiscal position” after the Covid pandemic.

He warned households will "see pressures for a while to come” at a Downing Street press conference this afternoon.

But he added: “We will continue to respond, just as we responded throughout the pandemic.

"It won’t be easy, we won’t be able to fix everything. But what I would also say is we will get through it and we will get through it well.”

Cost of living crisis

The government announced help for households back in February, including the £150 council tax energy rebate for four in five households.

There will be a £200 discount applied to every energy bill in October, which will have to be repaid over five years.

The Household Support Fund has also been doubled to £1billion, and this gives money to local councils to dish out to struggling residents in their area.

But the cost of living crisis has deepened since then and there are widespread calls to give more help to families struggling to get by.

The boss of one of Britain's biggest energy companies warned the cost-of-living crisis could endure for more than a year and a half.

Inflation is currently 9% and could rise further to 10% the Bank of England has warned.

The energy price cap limiting how much suppliers can charge for standard tariffs shot up by 54% in April pushing up bills for millions of people.

Around 22million households are currently on price capped tariffs as fixed deals are now far higher following a steep increase in wholesale energy costs since last year.

The price cap increase pushed the typical duel fuel bill from £1,277 to £1,971, though exactly how much you pay depends on usage.

That could rise again to £2,800 in October when the second of two annual reviews of the price cap take place, pushing even more people into financial difficulty.

Wholesale energy costs are going up due to global supply issues and the war in Ukraine.

While the price cap prevents these increase being passed on to consumers immediately, the price cap is based on the wholesale costs when it's reviewed creating a "shock" rise twice a year when they go up.

Ofgem is considering more regular reviews of the cap to spread out rises, and pass on any falls earlier.

Meanwhile other costs have gone up ranging from food to fuel, piling pressure on people's finances.

Petrol prices  have hit record highs in recent months while the price of some basic food items have shot up by as much as 60%.

One mum told The Sun how she worries that she won’t be able to feed her kids or keep her fridge running due to soaring energy bills.

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And a hard-working mum of two on Universal Credit and with a full-time job can no longer afford food or activities for her daughter.

Here's all the help you can get if you're on Universal Credit and struggling to get by.

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