For anyone who’s watched their energy bills skyrocket or had to choose between two favourite items at the supermarket, ‘the cost of living crisis’ is more than just a catchy buzz phrase: it’s everyday realty.
No wonder, then, that both the general public and Labour’s opposition government have been putting pressure on the PM and chancellor to do something about it. Last week, they finally buckled and announced a generous package designed to help people pay their bills without too much worry.
£400 for every household
Originally, Chancellor Rishi Sunak had promised to knock £200 off every family’s energy bills this autumn – but there was a catch. The money was going to be paid as a loan, not a grant, meaning that every A household would need to pay it back over the next five years. That’s not been scrapped, and instead we’ll be getting a £400 discount with no requirement to repay the money.
This will be a discount credited directly to your account by your energy supplier – so you won’t see the money land in your bank account, but should feel the end result. The discount is being applied in six monthly instalments, and you won’t need to apply in order to receive it.
On a pre-payment meter? The money will either be credited to the meter directly, or you’ll receive vouchers in order to top-up for free.
This is being partially funded by what’s known as a ‘windfall tax’, meaning that the energy companies making profits from rising prices are expected to foot the bill.
Additional £650 for those on benefits
There was a fine line to tread when creating this support package, as the government wanted to provide some help for every home while also targeting resources at those who need them the most. The solution was an additional £650 for anybody receiving means-tested benefits such as Universal Credit or tax credits. This time, the money will be paid directly into bank accounts, in two instalments. The first payment is expected to land this July, and you don’t need to apply in order to receive it.
A few other, more targeted, grants have also been announced with £150 going to those who receive disability benefits and £300 to pensioners who receive Winter Fuel Payments (on top of the existing payments).
Is it enough?
For those who are still just about managing, an extra £400 should be enough to help keep things a little less frosty this weekend. However, the announcement has already drawn criticism – both from those who say there isn’t enough help here for working households, and for those who say that the £400 grant would be better spent on those who are struggling the most.
One of the biggest controversies is the fact that wealthy homeowners with multiple properties may receive several grants – money that they didn’t necessarily need in the first place. Rishi Sunak’s response is to encourage those who don’t need the money to donate it to a charity supporting people in need.
Whether or not the money has been targeted effectively, it does mean that those receiving benefits will get over £1,000 to help with rising costs this year. This should go some way to fighting the worst effects of the so called cost of living crisis.