THE CHANCELLOR has announced a £350 package of measures to mitigate the rise in energy bills.
Rishi Sunak told MPs today that he wanted to “take the sting out” of the huge rise in energy costs announced this morning.
He said he would be giving people in England £150 back in council tax, with devolved governments receiving Barnett funds to enable them to do the same.
Only those in council tax bands A-D will receive the rebate.
He also announced that domestic electricity bills for 28million households would be reduced by £200 in October, with £40 added automatically to bills over the next five years to repay it.
It comes after the energy regulator Ofgem revealed that the price cap would be rising by 54 per cent – causing the average household energy bill to soar by £693.
Mr Sunak’s package equates to around £350, leaving people still paying hundreds more than they were before.
On top of the additional cash and reduction in bills, the Chancellor said he would be extending the warm homes scheme to include more people, and discretionary funding of £144 million would also be avalable to help low-income households, vulnerable people, those who don’t pay council tax or those in bands E-H who will not receive the rebate.
The total package comes to £9.1bn, the Treasury said.
Mr Sunak warned MPs today that it would be unfair to keep the prpice of energy “artificially low” and that people would have to accept that energy prices are rising in genEral.
He explained:”It is not sustainable to keep holding the price of energy artificially low.
“For me to just stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.
“But what we can do is take the sting out of a significant price shock.”
The Chancellor also addressed calls for a VAT cut to energy bills, rejecting the suggestion which has come from his own MPs as well as opposition members.
He explained there would be no guarantee of a saving for customers, and said:”I know that some in this house have argued for a VAT cut on energy.
“However, that policy would disproportionately benefit wealthier households.
“There would be no guarantee that suppliers would pass on the discounts to all customers and we should be honest with ourselves – this will become a permanent government subsidy on everyone’s bills, a permanent subsidy worth two and a half billion pounds every year at a time when we are trying to rebuild the public finances.
“Instead, our plan allows us to provide more generous support to those who need it most.”
Mr Sunak confirmed Scottish Government would receive £290m in Barnett consequentials as a result of his council tax rebate plan in England.
It will now be up to Finance Secretary Kate Forbes whether to mirror this plan in Scotland.
Labour’s shadow chancellor Rachel Reeves said the plan did not live up to the Tories’ previous commitment to neutralise the energy price rise.
She said the measures were a “buy now pay later” scheme which would cost more in future.
Ms Reeves continued: “High prices as far as the eye can see – this year, next year and the year after that, give with one hand now and take it all back later.
“By lending billions of pounds to energy companies, the Chancellor is gambling that prices are going to fall – but they could go up further in October. What then? Billions more loaded onto people’s bills?
“The best way of targeting support to those who need it most would be an increase to £400 and an extension to 9 million households of the warm homes discount, as Labour has proposed today. Their scheme today is a pale imitation of Labour’s, especially for the households and pensioners on the most modest incomes.”
SNP MP Alan Brown, the party’s energy spokesman, raised the issue of the electricity grid charging system and how it costs more for energy genberators to generate and supply energy from Scoand than it does in England.
He also asked for a guarantee that the funds would be paid to the Scottish Government in Barnett consequentials, which the Chancellor confirmed.
Liberal Democrat MP Christine Jardine said the Chancellor was “playing Russian Roulette with taxpayers’ money”.
She said Mr Sunak was “gambling prices will go down, rather than providing a real solution to help families avoid skyrocketing bills.”
The MP for Edinburgh West added: “It’s just delaying the pain while increasing taxes by £600 a year for the averge household.
“So why won’t he listen to our suggestions for package that would actually help families reduce their bills by £1000 a year?
“Surely it’s time to admit it he got it wrong. Scrap the conservative tax hikes.”