Energy / Government pledges £400 energy bill discount for all households

Chancellor Rishi Sunak has also confirmed a 25 per cent windfall tax on oil and gas profits

EVERY household in the UK will receive an energy bill discount of £400 from October as part of new UK Government measures to tackle the rising cost of living.

Chancellor Rishi Sunank announced in the Commons today that there will be a new, one-off £650 payment to more than eight million low-income households.

There will also be separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits.

A new temporary windfall tax is being imposed on oil and gas company profits as their income surges.

The new levy will be charged on oil and gas company profits at a rate of 25 per cent and is expected to raise around £5 billion in its first 12 months.

It comes after regulator Ofgem warned that price cap for energy is set to rise again in October, after increasing in April.

Sunak said the total cost of the government measures amounts to £15 billion.


The £400 energy bills discount due to come in from October is double what was previously mooted, while the requirement to pay it back will be scrapped.

“We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills,” Sunak said.

“We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society.

“I said we would stand by people and that is what this support does today. It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this.

“That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”

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Shadow chancellor Rachel Reeves, however, said the Labour party has backed these ideas – such as a windfall tax – for a long time.

Earlier this week Northern Isles MP Alistair Carmichael called for an emergency budget to tackle the rising cost of living.

Isles MP Alistair Carmichael.

On Thursday he said the government is playing catch-up  as it has been far too slow to react to the cost of living crisis. “It is likely that most families will still be significantly worse off come the winter fuel cost spike. Cutting VAT across the board as my party have advocated would be a simple way to save families money on their day-to-day bills,” he said.

“The belated move to tax excess profits from energy companies is a positive step but it is a little ironic given that the government spent months ridiculing the proposal. I am not usually a fan of one-off tax rises of this sort. Given the sheer volume of profit being generated by these companies as a result of soaring energy prices, however, this was the right thing to do and I am glad that the Conservatives and indeed the SNP have finally caught up with the Liberal Democrats on this policy.


“Some might suggest that the timing of this announcement is less about supporting households and more about moving headlines and saving the Prime Minister’s skin after the damning Sue Gray report this week.

Justina Miltienyte, head of policy at Uswitch, said: “The substantial action suggests that the government finally appreciates the unprecedented scale of the help needed, following Ofgem’s prediction that the number of households in fuel poverty could double to 12 million.”

Highlands and Islands Conservative MSP Jamie Halcro Johnston said: “I welcome this £15 billion package of measures, which builds on the support announced in March. This will be paid for in part by a levy on the high profits generated by oil and gas producers, which will be joined by safeguards to ensure exploration and development is not impacted.


“Today’s proposals will ensure that those in the most vulnerable households – those with low incomes, pensioners and people with disabilities – will receive additional help. We will also see the £200 support given through energy bills double to £400, and no longer have to be paid back in subsequent years.

“There will still be more to do to tackle the cost of living and help will be needed from all levels of government. But I am pleased that the Chancellor is now taking decisive action to protect people across the whole of the UK.”

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