The UK Government has today set out the detail for the rollout of the Energy Bills Support Scheme (EBSS) giving millions of households a £400 discount.
The announcement comes after consumer champion Martin Lewis called on Conservative leadership contenders Liz Truss and Rishi Sunak to meet with the outgoing Prime Minister to agree a package to help consumers.
He said Boris Johnson’s “zombie government” was failing to address the crisis caused by rising energy bills and warned decisions on support cannot be delayed until Mr Johnson’s successor is in office.
How the scheme will work
Administered by energy suppliers, the support scheme will be paid to consumers over six months with payments starting from October 2022. The Government says this will ensure households receive financial support throughout the winter months.
“We know there are tough times ahead and we will continue to do everything in our power to help people.”Nadhim Zahawi, Chancellor of the Exchequer
Those with a domestic electricity meter point paying for their energy via standard credit, payment card and direct debit will receive an automatic deduction to their bills over the six month period – totalling £400.
Traditional prepayment meter customers will be provided with energy bill discount vouchers in the first week of each month, issued via SMS text, email or post, using the customer’s registered contact details. These customers will need to take action to redeem these at their usual top-up point, such as their nearest local PayPoint or Post Office branch.
In all cases, no household should be asked for bank details at any point. Ministers are urging consumers to stay alert of potential scams and report these to the relevant authorities where they are suspected.
More communications needed
National Energy Action (NEA) has called on the Government to ensure households know support is coming. The NEA’s Head of Policy, Matt Copeland said “We don’t want people to miss out on vouchers that could keep them warm in the coldest months of the year.”
Adding that “additional support must be given to those households that will miss out on the £400, just because they don’t pay an electricity bill directly.”
Commenting on the rollout of the scheme, 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.”
Tough times ahead
The Government has calculated that households will see a discount of £66 applied to their energy bills in October and November, rising to £67 each month from December through to March 2023.
The non-repayable discount will be provided monthly regardless of whether consumers pay monthly, quarterly or have an associated payment card.”
This means that where a person’s housing circumstances change during the 6-month period, such as those leaving or moving home, they will still benefit from the relevant portion of the total £400.
This also applies to students and other tenants renting properties with domestic electricity contracts from landlords where fixed energy costs are included in their rental charges. In these circumstances, landlords who resell energy to their tenants should pass the discounted payments on appropriately, in line with Ofgem rules to protect tenants.
As part of this package, the Government has confirmed that further funding will be available to provide equivalent support of £400 for energy bills for the 1% of households who will not be reached through the EBSS. This includes those who do not have a domestic electricity meter or a direct relationship with an energy supplier, such as park home residents.
A Government spokesperson said an announcement with details on how and when these households across Great Britain can access this support will be made this Autumn.
Addressing the tough times ahead, Chancellor of the Exchequer, Nadhim Zahawi, said:
“We know that people are struggling with rising energy prices which is why we have taken action with support over the winter months to help ease the pressure on household budgets.
“This £400 off energy bills is part of our £37 billion of help for households, including eight million of the most vulnerable households receiving £1,200 of direct support to help with the cost of living.
“We know there are tough times ahead and we will continue to do everything in our power to help people.”
- Direct Debit customers will receive the energy bill discount automatically as a deduction to the monthly Direct Debit amount collected, or as a refund to the customer’s bank account following Direct Debit collection during each month of delivery
- Standard credit customers and payment card customers will see the energy bill discount automatically applied as a credit to standard credit customers’ accounts in the first week of each month of EBSS delivery, with the credit appearing as it would if the customer had made a payment
- Smart prepayment meter customers will see the energy bill discount credited directly to their smart prepayment meters in the first week of each month of delivery
- Traditional prepayment meter customers will be provided with redeemable EBSS energy bill discount vouchers or Special Action Messages (SAMs) in the first week of each month, issued via SMS text, email or post. Customers will need to redeem these at their usual top-up point
Keep vigilant against fraud
The Government has been keen to highlight that steps are also being taken to protect consumers from the risk of fraud, gaming, and non-compliance. Suppliers will be expected to report to government action they are taking to ensure the support has been passed onto consumers, including notifying customers in writing that they have received the £400 Energy Bill discount from HM Government, and ensuring it is clearly shown on bills or statements for Direct Debit and credit customers.
Energy Minister, Greg Hands said:
“Today we have set out how the Government will deliver discounts to help 29 million households with their energy bills this winter.
“I encourage families across the country to engage with these plans and particularly those customers on traditional prepayment meters who need to take action.
“Coupled with world-leading action to radically enhance our home-grown energy security, we will continue to be on the side of British consumers now and into the future.”
Additional cost of living support
Households most in need will be eligible for further support in addition to the Energy Bill discount. This includes:
- a £650 one-off Cost of Living Payment for around eight million households on means tested benefits
- a £300 one-off Pensioner Cost of Living Payment for over eight 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
Today’s announcement comes as the government launches an online service to help homeowners save money on their energy bills by providing a one stop shop of ways to make properties more energy efficient.
The new GOV.UK website, originally available through the Simple Energy Advice (SEA) service, offers a breakdown of support available through various schemes and how much financial support they can receive towards energy improvements.
This is part of the government’s ‘Help to Heat’ support, investing £12 billion to make homes, particularly for low-income households, warmer and cheaper to heat, already delivering average energy bill savings of around £300 a year.
£400 is not to be scoffed at. It will no doubt help people with the rising cost of energy prices in the winter.
However, with energy prices shooting up to £3,500 this Autumn, the amount announced by the Government is barely going to scratch the surface.
For each of the leadership contenders, they need to work with international partners to restore supply as soon as possible. Sky high energy prices are caused by a failure in international leadership to grasp the nettle. Both international supplies, as per the OPEC crises of the 1970s, and a shift to renewable/sustainable energy supplies need to be rectified.
As Europe pivots away from a dependence on Russian gas, something is needed to replace the lost energy supplies. This means the production of nuclear, solar, tidal and wind power is more important now than ever before. In particular, solar and wind could deliver short term respite given that technology and supply chains are already well advanced in the UK.
Let us hope this is at the top of the inbox for the new Prime Minister in September – their electoral fortunes depend on introducing a solution and fast.