As British households face a record 54% rise in energy billsfrom April, the chancellor, Rishi Sunak, has announced a £9bn plan intended to mitigate the cost-of-living crisis facing the nation.
All households will receive a one-off £200 upfront discount on their energy bills this year, which, however, will be automatically recovered from people’s bills in £40 instalments over the five years from 2023.
Four-fifths of UK households will further qualify – on average – for a £150 rebate on council tax for homes in bands A to D, which will not be repayable. The number able to claim warm homes discount, which is available for those receiving benefits, will be extended by a third, to 3 million.
Here, four householders share their reaction to Sunak’s announcement.
‘I do not know how people worse off than us will manage’
John Lancaster, 72, from Burnley, feels partial relief about the news that he will benefit from the council tax rebate, which will go some way towards mitigating a huge rise in his energy bills.
He and his wife were recently quoted a 12-month fixed dual-fuel tariff of an estimated £255.51 a month – a 145% increase in their current monthly direct debit payment of £104.06.
“We live in a band D property, so we will get the council tax rebate,” Lancaster said. “My wife, who is also retired, is disabled, so we are not going out a lot and heating our home is quite important. We will have to stop using some rooms and turn the heating off in them, and watch carefully what we spend on groceries.
“We hopefully will be able to absorb the new payments somehow by cutting down on shopping and meals out for example. I really do not know how people worse off than us will manage.”
The couple’s fixed dual-fuel contract with Octopus Energy is due to expire on 23 February. Lancaster tried to log into his account this morning to see whether their quote had changed since the announcement on the new energy cap. “But I couldn’t get in, there may have been too many people trying to do the same thing,” he said.
“After getting our last quote, we decided not to renew to another fixed tariff until the new price cap was announced to see whether the tariffs offered would alter. We now have a couple of weeks until our contract runs out, so we will check whether other suppliers make more attractive offers.”
‘The measures don’t go far enough’
“I don’t pay council tax so even though I’m eligible for the rebate it doesn’t apply to me,” said Sarah Moorby, from Kirkby Lonsdale, Cumbria. “It just won’t make any difference to mine and my children’s situation.”
Moorby, who spoke to the Guardian earlier this week about the rise in energy bills, said she applied for a council tax reduction and as she receives universal credit, her council decided she did not have to pay anything. Even though her household is in council tax band C, she said the rebate and the £200 repayable discount were “not as helpful as [they] could be” and did not “go far enough”.
The 39-year-old welfare assistant, who has three children, said she would have to prioritise her energy bill, which she fears may increase by about £2,500 a year, over other expenses such as food and clothing. “They should be a priority too but they will just get pushed further and further down the list,” she added.
Moorby was paying £105 a month with People Energy before the supplier went bust in September and moved to paying £209 a month with British Gas, a 99% increase.
“The only other option will be to turn the heating and electricity off. They’re basic commodities that people should have access to, like shelter, food and water. But now they’ve become almost luxury items,” she said.
“Even if I did turn the heating and electricity off and sat in a duvet in the dark, I would still have to pay standing charges. Also who wants to do that anyway? That’s not living.”
‘I’m not going to gain anything from the chancellor’s support package’
Aaron Warren, 37, a business development manager from Colchester, has done the maths and is mentally preparing for a huge financial monthly hit from April.
“I’m not going to gain anything from the chancellor’s support package, nothing at all. I will qualify for that energy bills rebate of £200, but that will have to be paid back.
“Since last year our house is in council tax band F, so no luck there. My family will be around £400 a month worse off from April, due to a combination of higher energy bills and a national insurance rise of around £80 a month for my wife and myself each.”
Warren and his wife both work full-time and several days a week from home to save thousands a year on commuting. The couple and their two young children, aged four and five, live in a four-bedroom semi-detached house built in the late 1980s.
“Our house is pretty energy efficient, but according to our latest quote we will be paying £365 for energy a month if we stay on a variable contract, and £387 if I fix our tariff for two years. In November 2020, our monthly bill was £118. Just enormous increases, it’s pretty upsetting.
“Some companies have quoted me over £400 a month – I never in a million years thought that’s how much I’d be paying for gas and electricity. The British Gas website kept crashing today, people are panicking now.”
Warren said the family’s spending behaviour would have to be adjusted to make up for this substantial rise in living costs. “We’re fortunate enough to be earning quite well, but we have two young children and costly childcare, and we’re changing our shopping habits already. I can see that many families will be in dire straits. You just feel like you keep getting hit.”
‘“How much is that going to equate over a year?’
“I don’t know how they [the government] expect people to afford it,” said Kate Ross, from Isleworth, west London. “I work from home mostly and when you do that your bills are bound to be more than usual,” added the 34-year-old.
Ross, who works for a design-and-build company, said she and her wife used to pay about £63 a month in September 2020 for their gas and electricity with Bulb Energy, which they have been with for five years. They were asked to increase their monthly direct debit on their fixed-rate tariff to £154.94, a rise of 146%.
She said the one-off £200 discount for households was “not enough” and even though they were also eligible for the £150 council tax rebate, it “doesn’t really cut it”. “How much is that going to equate over a year? It’s nothing really,” she added.