There’s a lot coming from a new government in a hurry to solve some big economic problems. Not all of it has gone very well and some changes need to be rethought. More on this later.
One immediate and definitive commitment is a huge package of help on energy. It’s likely to cost around £75bn over 2 years – but could be more or less, depending on how global gas prices move.
To put this in perspective this is more than some departmental budgets. A massive commitment – and one which makes a big difference to us all this winter.
Here’s the detail:
Domestic Energy Costs
The Government is offering cost of living support to every household. The £400 off energy bills is part of the £37billion package of help for all households. In total the scheme is worth £37bn.
Households will receive £400 off their energy bills from October, with the discount made in 6 instalments directly to energy providers to help people throughout the winter period.
The Energy Price Guarantee which will reduce the unit cost of electricity and gas so that a typical household, on average, around £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022.
The consumer saving will be based on usage (which is why it is important we all also look to reduce our energy consumption), but on average usage a household will save £1,000 a year (based on current prices from October).
Prepayment meter customers will be provided with Energy Bill discount vouchers from the first week of each month, issued via SMS text, email or post, using the customer’s registered contact details.
For people on LPG or heating oil, and those in a Park Home who pay landlords directly for their energy there will be help and I expect detail on this from the Chancellor shortly.
Households living on the lowest incomes will receive a further £1,200 of direct support to help with the cost of living. Those eligible for further support (in addition to the Energy Bill discount) include:
- a £650 one-off Cost of Living Payment for around 8 million households on means tested benefits
- a £300 one-off Pensioner Cost of Living Payment for over 8 million pensioner households to be paid alongside the Winter Fuel Payment
- a £150 one-off Disability Cost of Living Payment for around six million people across the UK who receive certain disability benefits
- a £500 million increase and extension of the Household Support Fund available to councils to support vulnerable households with the cost of essentials such as food, utilities and clothing
The government has also launched an online service to help households make their homes more energy efficient and reduce their costs: https://www.gov.uk/improve-energy-efficiency
There are lots of organisations offering advice and tips available online to help people save money on their energy bills. Here are some of the best I’ve found:
Quick tips to save energy at home - Energy Saving Trust
Top 10 tips: energy saving in the home - Warm and Well
ENERGY SUPPORT FOR BUSINESSES
The government has announced the Energy Bill Relief Scheme for:
- voluntary sector organisations, e.g charities
- public sector organisations e.g schools, hospitals, and care homes
The only exceptions are businesses that use gas or electric for the purpose of generating power to sell back to the grid.
There are three different types of scheme depending on the type of energy user you are.
Your supplier should automatically apply the reduction to your bills so you won’t need to do anything if you are eligible. You should see savings for energy used in October in your October bill, likely received in November.
The scheme will be reviewed in March to see if any additional or ongoing support is needed. I know some businesses would like immediate longer-term support but it’s right that once we get through the worst of winter the government sees where the situation is.
Do see below the basic outline how you benefit from depending on your type of contract:
There is always more that every organisation can do to save energy costs. Just switching to LED lights is saving one Westgate shop over £1,000 a year. Do check out this helpful guide from EDF: https://www.edfenergy.com/for-home/energywise/cut-business-energy-bills
I hope this is helpful, but if unclear do let me know via email@example.com
PS I'll come back to the macro economic questions in a few days, when I believe things will be clearer.