ENERGY bills could be slashed by £400 this winter in a plan to cut the price cap amid the cost-of-living crisis.
Chancellor Nadhim Zahawi has reportedly asked Treasury officials to work on a multibillion-pound relief package, which could lead to a drop in the energy price cap from January.
The Treasury is said to be working on a multibillion-pound relief package for struggling households
The inflation-busting measure will give Ofgem better say over what the price cap should be while scrapping an allowance that energy suppliers charge customers, according to SEday Times.
The publication reported that the cost will instead be covered by the Treasury and the Bank of England.
According to treasury estimates handed to Zahawi and other ministers this week, the new proposals could lead to a reduction in the price cap and much-needed relief for stretched British households battling the cost of living crisis.
The scheme won’t come into play before the next price cap rise in October, but could be in place by the beginning of 2023.
Senior government sources told SEday Times that the proposals were being worked on for either Liz Truss and Rishi Sunak to potentially announce when one of them becomes the new Prime Minister on September 5.
Meanwhile, Keith Anderson, chief executive of ScottishPower, has proposed freezing bills at their present level of £1,971 for two years.
That could see suppliers cover the gap between this and the wholesale price by borrowing from a “deficit fund” supported by commercial banks and repay the debt over 15 years.
The cost of the repayments would then be passed onto customers over the same period or moved into taxation.
Mr Anderson’s idea had been floated in April but was reportedly rejected by then Chancellor Rishi Sunak in favour of a £15billion pay-out to households.
It comes as recent estimates published last week predicted the cap would rise to an eye-watering £3,500 in October, before increasing to more than £4,200 in January.
This could leave households paying more than £500 in the first month of the new year.
The cost of an average family’s annual energy bill could reach nearly £5,300 from April if wholesale prices for gas and electricity do not fall soon.
This is the worst forecast yet for the millions of households set to face crippling bills this winter.
The energy price cap works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity.
It’s not a cap on how much you can be charged for the energy that you use – so if you use more expect to pay more.
While the predictions are for grim reading, it’s important to recognise the figures may change.
The new prediction follows the news that some have some energy customers have already seen hikes to their direct debits now, to take into account the future price hikes.
Chancellor Zahawi and Business Secretary Kwarteng met with energy company chiefs yesterday.
A Government source said “no option was off the table” as to how the firms’ colossal profits could be targeted to make bills fairer.
How can I get help with my energy bills now?
If you’re worried that you won’t be able to afford your energy bills, we outline how you can get £3,200 in help.
Energy bill discount – £400
Over 29 million households will be eligible for a £400 discount on their energy bills.
This will be automatically taken off your energy bills from October.
Energy suppliers have been instructed to pay households the discount in six instalments.
This means 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 on a monthly basis regardless of whether consumers pay monthly, quarterly or have an associated payment card.
Those using a traditional prepayment meter will have to take action to get the cash.
They’ll need to redeem discount vouchers sent by their energy firm at their usual top-up point.
Energy bill grants – up to £1,500
Many energy suppliers have schemes in place offering you financial assistance if you’re falling behind or owe money for your bills.
You can get up to £1,500 from British Gas for example – and you don’t even have to be a customer.
The maximum grant is usually £750, but those facing “exceptional circumstances” can get £1,500.
While Scottish Power will wipe off up to 40% off eligible customers’ debts, capped at £750 per household.
Octopus customers can get cash grants of between £50 and £500, and at Bulb, you can get money to put towards your bills worth up to £140, and you can get your debts cleared which is capped at £2,000.
Eligibility for the help will vary from supplier to supplier – check out more information about who can claim in our explainer.
Household support fund – up to £300
Councils have been given a Household Support Fund that helps families with the rising cost of living.
The scheme, which has a £500million pot of money, is due to end on September 30, 2022.
You can get help from your council if you are struggling with your energy bills.
For example, residents in Blackpool can get as much as £300, depending on their circumstances.
However, you could get more – or less – than this if you live elsewhere, as it depends on what your council is offering.
To find out what support is available in your area, contact your local council.
Welfare assistance – up to £1,000
Many local authorities run welfare assistance schemes, which are available to people on a low income who have run into
While you could get up to £1,000 in some areas – which would come in handy for paying your rising energy bills.
As each council runs its own scheme – and decides what help to dish out – some families can claim more than others.
financial difficulties – or who have had to deal with a crisis.
Cost of living payments: what you need to know
- All the key dates for cost of living payments revealed
- Every household will get a £400 cost of living payment to help with energy bills
- See the full list of benefits eligible for £650 cost of living cash
- Here’s free cash you can get if you DON’T qualify for the £650 cost of living payment
- Millions of pensioners will get a £300 cost of living payment this winter
- Disabled Brits will get £150 this September
- Parents can get up to £200 towards school uniform costs