The government is urging households across England to set up a direct debit with their local council so they can receive a £150 council tax rebate that can be used to help with rising energy costs.
Who will receive the £150 rebate?
It’s expected that around 20 million households in council tax bands A-D (which includes 95% of rented properties) will benefit from the council tax rebate, which is costing the government £3 billion. The rebate will come in the form of a one-off payment that doesn’t have to be repaid.
In addition to this, an extra £144 million is also being given directly to councils. This money will be used to provide discretionary support to vulnerable households who do not qualify for the rebate. It’s expected most of this money will be provided to families on low incomes who live in properties in council tax bands E to H.
How will the rebate be received?
People who pay their council tax via direct debit will see the £150 rebate go directly into their bank account from April. Anyone who does not pay via direct debit will be contacted by their local council and will be asked to make a claim.
As a result, those who set up a direct debit will receive their rebate far quicker than those who do not. They will also benefit from receiving the payment directly, rather than having to make a claim.
Is any other support available?
The council tax rebate is a central part of the government’s £9.1 billion support package.
From October, every household in the country will also receive a further £200 rebate on their energy bills. However, this rebate actually comes in the form of a loan. From April 2023, households will pay £40 per year in repayments for a period of five years. It’s expected that global wholesale gas prices will have started to come down by this stage, so repayments will become more affordable.
Finally, the government is also expanding the Warm Home Discount Scheme. This will mean that nearly 3 million low-income households will benefit from a £150 discount.
Why is all this help needed?
The government is stepping in to help vulnerable households because energy bills have risen sharply over the past 12 months.
On top of this, earlier this month, energy regulator Ofgem announced that it is increasing the energy price cap (which restricts how much a supplier can charge) by almost £700 from 1 April. This means the price cap will rise from £1,277 to £1,971 per year, on average.
This sharp rise in energy bills has been caused by a number of factors, including huge spikes in wholesale prices, supply issues and rising demand for gas following the pandemic.
But, even though the price cap is rising, customers are being urged to ‘do nothing’ instead of running an online energy comparison. This is because the best energy deals on the market from the UK’s best energy suppliers are still unable to beat the price cap.
Instead, it’s hoped that the government’s package of reforms will help prevent households from being plunged into fuel poverty.