Government to announce energy bill rebate - report
By Abigail Townsend
Date: Wednesday 02 Feb 2022
(Sharecast News) - The government is poised to announce a rebate on energy bills, it was reported on Tuesday, a day ahead of Ofgem announcing how much the price cap will rise by.
The energy regulator said on Wednesday that it was bringing forward the announcement on the price cap from 7 February and would now publish its decision at 1100 GMT on Thursday.
After a surge in gas and electricity prices over the last year, which has already caused a number of energy companies to collapse, the cap on how much suppliers can charge is forecast to be lifted by around 50% to £2,000 from 1 April.
That is expected to hit households especially hard as it comes on top of surging inflation - currently at a near 30-year high of 5.4% - and an imminent 1.25p in the pound increase to National Insurance contributions.
A recent report by think tank Resolution Foundation said the number of households suffering from fuel stress - which it defines as spending at least 10% of their budget on energy bills - was set to treble to 6.3m households from 1 April.
In response, the government, which is currently mired in scandal over the numerous parties held at Downing Street during lockdown, has reportedly agreed a so-called "rebate and clawback" scheme. According to The Times, the government could announce the scheme as early as tomorrow.
Under the terms of the scheme, it is thought that taxpayers will underwrite loans to energy firms, which in turn will pass the money on to households in the form of a one-off rebate on their energy bill. The energy companies will recoup the rebates from customers in subsequent years, allowing them to pay back the loans as energy prices recede.
Energy prices are widely forecast to stay at record highs for another three years, although prices could spike further should hostilities worsen between Russia and Ukraine.
According to the Times, quoting sources in the energy industry, it is thought the government may offer companies access to £6bn in loans, which would be equivalent to a rebate of £200 per household. Other schemes that are already in place, such as the warm homes discount, could also be extended for the poorest families.
Ministers, including prime minister Boris Johnson and chancellor Rishi Sunak, are understood to have agreed the scheme.
Some MPs have called for the government to cut VAT on fuel bills to help further, but it is understood that both Downing Street and the Treasury have rejected this.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN