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Government announces new energy-focused cost of living relief measures

Government announces new energy-focused cost of living relief measures

The Government has today announced a £15 billion package of relief measures aimed at easing the burden of the cost of living crisis for UK households, with a specific focus on energy.

The most eye-catching intervention is a new one-off “cost of living payment” of £650 to eight million of the UK’s most vulnerable households - those who receive Universal Credit, Tax Credits, Pension Credit and legacy benefits.

Additionally, separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits will be made.

This package follows closely behind the previous set of measures announced earlier in the year, which had been criticised by opposition parties and industry experts for not going far enough to help UK households. The funding for these measures has only been achieved thanks to a windfall tax on oil and gas companies, which have been making extraordinary profits thanks to high wholesale prices - something opposition parties had been calling for some time.

Another significant element of this new package is the change made to the £200 loan on energy bills that every household was due to receive from October. This has now been doubled to £400, but will no longer be required to be paid back.

A £500 million increase will also be added to the Household Support Fund, which is delivered by local authorities and is now extended until March 2023. This brings the total Household Support Fund to £1.5 billion.

Justina Miltienyte, head of policy at Uswitch.com, comments: “Households are feeling the turbulence of a stormy energy market, and the prospect of a £2,800 price cap now looms on the horizon.

“These latest Government measures have been a long time coming and will go some way towards helping customers weather the storm.

“The substantial action suggests that the Government finally appreciates the unprecedented scale of the help needed, following Ofgem’s prediction that the number of households in fuel poverty could double to 12 million.

“Doubling the bill rebate to £400 is a sensible step, and it is good news that it will not have to be repaid. This measure will give some welcome relief to customers and reduce the impact of soaring bills, especially for those on the brink of financial hardship.

“We have long called for an increase in support for the vulnerable who will be worst hit by the energy price hikes. So the one-off £650 payment to the eight million people with the lowest incomes is to be applauded, as is the £300 for pensioners and £150 for those receiving disability support.

“The devil is in the details though and we still don’t know how the payments will be distributed. We will be watching to see how the Government implements these proposals and ensures help actually reaches all those that need it.”

Ofgem announces consultation on quarterly price cap review

In other news, Ofgem has recently announced that it is opening a consultation on quarterly price cap reviews. This would see the price cap level reviewed and potentially changed every three months (in January, April, July and October) to better reflect the constantly shifting wholesale market and ensure prices passed on to customers are as fair as possible.

If implemented, the quarterly price cap reviews would begin in October 2022, with customers first seeing the effects in January 2023.

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