The government's Energy Price Guarantee will kick in on 1 October, and a £400 energy discount will be rolled out in six monthly instalments. Those on the lowest incomes started receiving the first part of a £650 cost of living payment in July.
Here, we break down the measures the government is rolling out to help households through the cost of living crisis. Scroll down to find out more about:
- The government's Energy Price Guarantee, which effectively caps energy unit rates for households on variable tariffs or higher fixed tariffs;
- The Energy Bill Support Scheme, which will see every household receive a £400 discount on their winter 2022 energy bills;
- Additional energy payments for vulnerable groups;
- How the money will be paid to you.
For more help with the increasing cost of living, head to our money-saving advice.
Additional support has also been announced for businesses and other organisations: find out more about the Energy Bill Relief Scheme.
The Energy Price Guarantee
The Energy Price Guarantee (EPG) will see the government top up your energy payments to account for the enormous rises in wholesale energy prices. It will be in place from 1 October 2022 for two years.
No matter what type of tariff you are on, you do not need to do anything to receive this support - your energy company will apply it automatically to your account. You should receive information from them before 1 October about what your new unit rates will be.
The EPG does not affect standing charges, which will stay as they would have been from October 2022. They are different depending on where you live. The averages for these are 46p per day for electricity and 28p per day for gas if you pay by direct debit, and 51.41p per day for electricity and 37.51p per day for gas if you pay by prepayment.
- If you pay for a variable tariff by direct debit, the amount you pay per kilowatt hour will be capped at an average 34p for electricity and 10.3p for gas. The exact amount will vary depending on where you live. Anyone on a variable (sometimes known as standard or default) energy tariff will see their bills rise from 1 October, as even with the support, bills will still be higher than they have been up to this point.
- If you are on a fixed tariff with unit rates higher than 34p for electricity and 10.3p for gas, your rates will be reduced down to these levels, so you'll end up paying the same as someone on the variable tariff. This is up to a maximum unit rate reduction of 17p for electricity and 4.2p for gas, so if you fixed rates higher than 51p for electricity and 14.5p for gas, then your bills may still be slightly higher than those on variable tariffs. In this situation, you might find you are better off switching back to your provider's variable tariff (though do take into account whether exit fees would apply).
- People with pre-payment meters will also have their unit rates reduced by a maximum of 17p per unit of electricity and 4.2p per unit of gas. Average rates for prepayment will be 33.08p per kilowatt hour for electricity and 10.63p per kilowatt hour for gas.
- Customers in Northern Ireland will receive equivalent support, and this is due to be applied to bills from November 2022, backdated to your October energy use.
- Customers who are not connected to the mains gas grid, for example those who heat their homes with heating oil, will receive a £100 one-off payment.
Find out more: What the energy price guarantee might mean for your bills
The Energy Bill Support Scheme: one-off £400 energy discount for all households
As well as the two-year EPG, the Energy Bill Support Scheme (EBSS) announced earlier this year will continue to roll out this winter as planned.
This will give all households with an electricity tariff a £400 discount on their bills this winter. This will be paid as a credit onto your electricity bill in instalments from October 2022 to March 2023, and it won't need to be paid back.
Energy customers in Northern Ireland will also get the same discount through the Northern Ireland Energy Bill Support Scheme.
If you live in a park home, houseboat or are otherwise off the mains electricity grid, you will also receive equivalent support of £400 for energy bills.
How will your £400 energy discount be paid?
The EBSS will be paid in instalments. You will get £66 in October and November, and £67 in December, January, February and March.
- If you pay for electricity by direct debit the money will be either automatically credited to your energy account (ie. a reduction in your monthly direct debit amount), or returned to your bank account each month following your direct debit payment. If you feel your direct debit payments are too high, you can let your energy provider know and ask for them to be reduced.
- If you pay by standard credit or payment card, your discount will be automatically applied as a credit to your account in the first week of each month. The credit will appear as it would if you had made a payment.
- If you have a smart prepayment meter, the money will be credited directly to your smart prepayment meter in the first week of each month.
- If you have a traditional prepayment meter, you’ll get the discount from the first week of each month. You’ll get the discount automatically in one of the following ways: as redeemable vouchers, sent by SMS text, email or post, or as an automatic credit when you top up at your usual top up point. Your electricity supplier will let you know in advance how you will get your discount. Make sure they have your up-to-date contact details.
Read more: If you're trying to cut down your energy usage, find out 10 ways to save on your energy bills
Additional energy payments for vulnerable groups
As well as the £400 EBSS discount, targeted support for pensioners, those on low incomes and those with disabilities is also available.
£650 for those receiving means-tested benefits
8m of the lowest income households in the UK will each receive a £650 cost of living payment on top of the EBSS.
To be eligible, you must be receiving certain means-tested benefits. This includes Universal Credit, tax credits, pension credit and other means-tested benefits.
The money will be paid directly into people’s accounts from the Department for Work and Pensions (DWP) in two lump sums.
The first payment of £326 started being paid to the qualifying 8m UK households from 14 July. The second payment of £324 will follow in the autumn.
Around 1.1m households receiving tax credits got their first cost of living payment of £326 automatically paid into their bank accounts between 2-7 September.
If you think you are eligible for the payment and can't see it in your bank, building society or credit union account, you can report it to HMRC here.
£150 for those receiving non-means-tested disability benefit
If you are one of the six million people who receive non-means-tested disability benefits, you will be given an extra one-off cost-of-living payment worth £150.
It will be paid automatically from 20 September and the majority of eligible people will receive their payment within a couple of weeks of this date.
Any disabled people who also receives means-tested benefits can receive both the £650 payment above and this £150, bringing your total additional payment to £800. You'll also get the £400 due to every household.
£300 for pensioners receiving Winter Fuel Payment
Finally, pensioners who currently receive the government’s Winter Fuel Payment – set up to help cover the costs of energy bills during the colder months – will be given an extra one-off sum of £300 in the autumn.
To be eligible for the Winter Fuel Payment, you must be born on or before 26 September 1956. Payments are between £100 to £300, depending on your age and circumstances.
Those on lower incomes who claim pension credit will also receive the £650 as part of the means-tested benefits package above.
Read more: Find out what help is available if you're struggling to pay your energy bill
How you'll get your cost of living payments
Energy discount payments
In England, Scotland and Wales, the £400 energy discount will be paid in six instalments, with households seeing £66 knocked off their energy bills in October and November, and £67 a month from December to March 2023.
For most people, the discount will be applied to your energy account automatically and you don't have to do anything to receive it.
The exception is those with 'non-smart' traditional prepayment meters. They will receive either 'Special Action Messages' or vouchers from their supplier in the first week of each month, via text, email or in the post. The voucher will be redeemable at top-up points, such as a local Post Office, and the discount will be credited to the meter key. It's therefore important your supplier has your current, up-to-date contact details.
This has raised concerns, as these kind of meters are often used by the poorest and most vulnerable households, and being paid the discount in this way could leave them more exposed to fraudsters.
Please be aware that you will never be asked for personal information such as bank details to receive this payment, as you'll get a voucher to use where you normally top-up your meter.
Cost of living payments
As already mentioned, the £650 cost of living support money will be paid directly into eligible people’s accounts from the Department for Work and Pensions (DWP) in two lump sums. The first of which will be paid from 14 July.
Steps are also being taken to ensure that vulnerable groups that are more likely to pay bills by cash and cheque, and who may not have already registered their bank details, are identified and don't miss out on the government's cost of living support.
The Confirmation of Payee service – a banking security measure that helps to make sure payments aren't sent to the wrong bank or building society account – is working with payment system provider PayPoint to ensure these customers are given alternative ways to access the funding, and are not excluded.
Watch out for scammers
Note that scammers have been using the cost of living crisis as a means of duping people into making payments and/or handing over their bank details, so make sure any communication you receive purporting to be from from DWP, your energy supplier or any other organisation is legitimate.
There is no need to apply for the energy discount, and the government will not ask for your bank details - so watch out for any communication that suggests otherwise.
Our story on cost of living scams to watch out for can help you spot the fraudsters.
Rocio Concha, Which? director of policy and advocacy, said: 'Fraudsters are relentless in their pursuit of people's personal information and money, and there has been a huge jump in energy-related scams exploiting the cost of living crisis, so consumers should be really wary of suspicious texts, emails or letters using the energy bills discount as a hook.
'While energy suppliers will be reaching out to customers about the discount, it is important to note that they will never ask for bank details. Customers on traditional prepayment meters who will receive the rebate via vouchers can prepare by making sure their contact details are up to date and looking out for letters from their supplier, but it is also incumbent on suppliers to make clear to customers how and when they will be communicating with them to avoid potential confusion.
'Which? encourages energy suppliers to sign up to its SMS best practice guide for businesses, to make it easier for consumers to spot scam texts impersonating suppliers.'
Why haven’t I received July’s cost of living payment?
People started receiving the first part of the government’s £650 cost of living grant on Thursday 14 July.
The first thing to check is whether you are eligible. Only people who are currently on means-tested benefits will receive the money from the Department for Work and Pensions (DWP).
You must have been entitled, or later found to be entitled, to at least one of the following benefits between 26 April 2022 and 25 May 2022:
- Universal Credit
- Working tax credit
- Pension credit
- Child tax credit
- Income-based jobseeker’s allowance
- Income-related employment and support allowance
- Income support.
Payments were staggered and everyone should have received the first instalment by 31 July.
The only exception is people on working tax credit. The first payments began being paid on 2 September. The second half of the grant worth £324 will follow in the winter, but the exact date is yet to be announced.
If your circumstances are more complex, you may have to wait longer. For example, if you applied benefits within the qualifying time period but your application has yet to be approved by the DWP.
Another reason for the wait might be because you recently changed your bank details but didn’t inform the DWP. In this case, the payment may have been sent to the wrong account and therefore been rejected.
If this happens, the DWP should follow up with you. However, if you’re unsure, get in touch with the DWP directly and provide the correct details to prevent further delay.
Other cost of living help
Extension of the Household Support Fund
In order to help those who may 'fall through the cracks' – for example, people on housing benefit who are not claiming any other benefits – the government will extend the Household Support Fund, delivered by local authorities, by £500m from October.
The Household Support Fund is a measure that provides households with payments to help with essentials such as food, utilities and clothing. It was first introduced in September 2021 and was due to run until 31 March 2022, before being extended. Half of the fund is set aside for households with children.
State pension triple lock confirmed
In addition to the one-off payments, the state pension triple lock will be reinstated for 2023-24; it was temporarily changed to a 'double lock' for this year due to high inflation.
This means state pension payments will increase by either wage growth, September CPI inflation, or 2.5% – whichever is highest.
The state pension could be worth more than £10,000 for the first time ever next year, as it looks set to rise by CPI inflation.
Benefit payments will also increase by September's CPI inflation, providing an uplift for claimants next year.
- Find out more: what is the state pension?
This article was first published on 26 May and has been regularly updated since then. It was last updated on 28 September.
source https://www.which.co.uk/news/article/everything-you-need-to-know-about-the-governments-energy-support-amf4S7t6qm95