Energy bills to be cut ‘by up to £400’ under Sunak cost of living support plan

Chancellor to announce measures to ease cost of living crisis on Thursday

Chancellor Rishi Sunak has come under pressure to provide help for struggling families (PA Wire)

Hundreds of pounds will be cut from energy bills under measures expected to be announced by Rishi Sunak to ease the cost of living crisis.

The chancellor is to ditch the previously announced £200 loan on energy bills and replace it with a grant that will not have to be paid back, with the discount possibly increasing to as much as £400, according to reports.

And despite initial opposition from himself and other prominent government figures – such as Brexit opportunities minister Jacob Rees-Mogg – Mr Sunak is set to approve a windfall tax on energy companies.

Extra measures which have been discussed as part of a package worth around £10bn could include a further increase to the warm homes discount to help low-income households cope with rising energy bills.

Other policies which have been discussed include increases in the winter fuel allowance, a further cut in council tax or a VAT cut.

Mr Sunak will detail his plan in the Commons on Thursday as the government seeks to regain the initiative following a damaging set of revelations in Sue Gray’s report on the Partygate row.

The need for extra help was illustrated earlier this week by Ofgem chief executive Jonathan Brearley, who gave a dire warning that the energy price cap will increase by a further £830 to £2,800 in October.

Ministers have spent months criticising the idea of a windfall tax because of its potential impact on investment. But on Wednesday a Tory source said the arguments had been “tested rigorously” within both the Treasury and wider government.

Cost of living: how to get help

The cost of living crisis has touched every corner of the UK, pushing families to the brink with rising food and fuel prices.

• The Independent has asked experts to explain small ways you can stretch your money, including managing debt and obtaining items for free.
• If you need to access a food bank, find your local council’s website using gov.uk and then use the local authority’s site to locate your nearest centre. The Trussell Trust, which runs many foodbanks, has a similar tool.
• Citizens Advice provides free help to people in need. The organisation can help you find grants or benefits, or advise on rent, debt and budgeting.
• If you are experiencing feelings of distress and isolation, or are struggling to cope, The Samaritans offers support; you can speak to someone for free over the phone, in confidence, on 116 123 (UK and ROI), email jo@samaritans.org, or visit the Samaritans website to find details of your nearest branch.

“There’s a high threshold that any package that we bring forward delivers more gain than pain, that the gain is worth the pain, that it does not jeopardise the investment,” he said.

“You don’t introduce random taxes that make the economic environment unpredictable.”

Offshore Energies UK (OEUK), which represents the offshore oil and gas industry, has warned a one-off tax on North Sea firms would see higher prices and do long-term damage to the oil and gas industry.

A Treasury spokesperson said: “The chancellor was clear that as the situation evolves, so will our response, with the most vulnerable being his No 1 priority.

“He will set out more details tomorrow.”

The prime minister said the hundreds of billions poured in to dealing with the Covid pandemic had left a “very difficult fiscal position”.

At a Downing Street press conference, he acknowledged households “are going to see pressures for a while to come” as a result of the spike in global energy prices and supply chain problems following the pandemic.

But he said: “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.”

Labour leader Sir Keir Starmer has argued a U-turn on the windfall tax was “inevitable” as the tax on North Sea firms would “raise billions of pounds, cutting energy bills across the country”.

Additional reporting by PA