According to reports, Chancellor Rishi Sunak is expected to announce a £10 billion cost of living support package today (Thursday), which could include a £400 grant for cash-strapped households battling rising food, energy and fuel costs in the current cost of living crisis.
The £400 grant could replace the £200 energy bill 'rebate'.
This comes on the back of news that the energy regulator Ofgem is predicting a whopping 42% rise in the energy price cap in October.
This could add an average of £800 to household energy bills, taking the average annual household energy bill to around £2,800 and tipping nearly 10 million households into fuel poverty according to the Resolution Foundation. (opens in new tab)
“The sheer scale and depth of Britain’s cost-of-living crisis means the Government must urgently provide significant additional support”, says Jonny, Marshall, senior economist at the Resolution Foundation (opens in new tab).
“The fact that the crisis is so heavily concentrated on low-and-middle incomes households means it’s clear how the Government should target policy support. The benefits system is clearly the best route to support those worst affected in the short term – be that via an early uprating or lump sum payments to help poorer households get through the difficult winter ahead”.
What financial help could households expect from the Chancellor?
We don’t yet know the details of the Chancellor’s cost of living support package, but it could include help with fuel bills, in addition to the £200 energy bill rebate already promised to 28 million households across England, Scotland and Wales in October.
There could be an increase in the Warm Home Discount Scheme - aimed at low income households, this is currently £150, but could go up to £500.
A planned increase in benefits, expected this summer, along with the promised 1p cut in income tax, due to take effect in 2024, could be introduced earlier than planned.
Sue Anderson at StepChange debt charity says they want to see targeted support for vulnerable households who are having difficulty making ends meet.
“This would include uprating benefits in line with inflation, pausing benefit deductions and enforcement action on energy debts, and increasing energy bill support by expanding the Warm Homes Discount”.
“Unless the government’s announcement includes measures targeted at those on the lowest incomes, many will face mounting problem debt and destitution that will only escalate as prices continue to rise.”
Where will the money come from to cover the cost of living support package?
Funding for this multi-billion pound support package could be generated via an energy windfall tax.
This has previously been a hot potato of controversy, with Labour calling for its introduction, and the prime minister previously having opposed it.
If a windfall tax is introduced, it could be levied on the big energy suppliers, including North Sea companies and windfarm operators and electricity generators.
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