One energy boss warned that households will burn through the monthly support in just a few days.
29 July 2022
Experts have called for more support for households facing “the most expensive winter in history” as the Government revealed how its £400 energy costs support will be paid.
The money, which is part of a package announced in May this year, will come in the form of a monthly deduction from bills over six months for some 29 million households.
Customers will see £66 taken off their energy bills in October and November, and £67 each month from December to March, the Government said.
But one energy company boss said households could burn through that money in just a few days.
The news marks the first detail of how the Government will pay out the £400 support for all households that then chancellor Rishi Sunak announced in May. He also promised extra help for the poorest households.
That support came in response to predictions that energy bills will rise to £2,800 for the average household in October.
However, since then the forecasts have become even bleaker.
Consultancy BFY believes bills could hit £3,420 per year from October, before rising further in January.
January’s forecast would be nearly twice as high as the current price cap.
On Friday, Richard Neudegg, director of regulation at Uswitch, called for the £400 to be increased to at least £600, and for payments to vulnerable households to rise from £650 to £950.
“The Government did the right thing by stepping in with wide-reaching support to try to help ease the blow. However, this support now looks like a severe under-estimation of what consumers need,” he said.
“Households need clarity to help them plan for the most expensive winter in living memory.”
The chairman of energy company Utilita said the worst is “potentially yet to come”.
Derek Lickorish told BBC Radio 4’s Today programme that special focus is needed on the poorest households.
In 2020 £50 of energy would have lasted 12 days, he said. Now customers could burn through that amount in three-and-a-half days.
He called for the introduction of a social tariff which discounts bills for those worst off.
Business and Energy Secretary Kwasi Kwarteng said: “People across the country are understandably worried about the global rise in energy costs and the pressure this is placing on everyday bills.
“While no government can control global gas prices, we have a responsibility to step in where we can and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months.”
Those with a domestic electricity meter who pay for their energy via standard credit, payment card or direct debit will receive an automatic deduction from their bills.
Traditional pre-payment meter customers will be provided with energy bill discount vouchers in the first week of each month, issued via SMS text, email or post.
Chancellor Nadhim Zahawi said the discount is “part of our £37 billion of help for households, including 8 million of the most vulnerable households receiving £1,200 of direct support to help with the cost of living”.
The announcement comes after consumer champion Martin Lewis said the Prime Minister and Conservative Party leadership contenders Liz Truss and Rishi Sunak need to agree a package to help consumers.
He said Boris Johnson’s “zombie government” is failing to address the crisis caused by rising energy bills and warned that decisions on support cannot be delayed until his successor is in office.
Money Saving Expert founder Mr Lewis said households will start receiving notice of increased bills before the Tory leadership contest concludes, ahead of the energy price cap rising to £3,500 or more in October.