UK households facing ‘most expensive winter in history’

The £400 payment, which is part of a package announced in May this year, will come in the form of a monthly deduction from bills over six months for approximately 29 million households.

Customers will see £66 taken off their energy bills in October and November and £67 each month from December to March, the Government said. However, one energy company boss has said that households could burn through that money in just a few days.

The news marks the first detail of how the Government will pay out the £400 support for all households, which the then chancellor Rishi Sunak first announced in May. Sunak also promised extra help for the poorest households. 

That support came in response to predictions that energy bills will rise to £2,800 for the average household in October. Since May, however, the forecasts have become even bleaker. Consultancy BFY believes bills could hit £3,420 per year from October, rising even further in January. January’s forecast could be nearly twice as high as the current price cap.

Richard Neudegg, director of regulation at Uswitch, called for the £400 to be increased to at least £600 and for payments to vulnerable households to rise from £650 to £950.

“The Government did the right thing by stepping in with wide-reaching support to try to help ease the blow. However, this support now looks like a severe under-estimation of what consumers need,” Neudegg said. “Households need clarity to help them plan for the most expensive winter in living memory.”

Derek Lickorish, chairman of energy company Utilita, said the worst is “potentially yet to come”. Speaking to BBC Radio 4’s Today programme, Lickorish said that special focus is needed on the poorest households. In 2020, £50 of energy would have lasted 12 days, he said. Now customers could burn through that amount in three-and-a-half days. He called for the introduction of a social tariff, which discounts bills for those worst off.

Business and energy secretary Kwasi Kwarteng said: “People across the country are understandably worried about the global rise in energy costs and the pressure this is placing on everyday bills.

“While no government can control global gas prices, we have a responsibility to step in where we can and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months.”

Those with a domestic electricity meter who pay for their energy via standard credit, payment card or direct debit will receive an automatic deduction from their bills.

Traditional pre-payment meter customers will be provided with energy bill discount vouchers in the first week of each month, issued via SMS text, email or post.

Chancellor Nadhim Zahawi said the discount is “part of our £37bn of help for households, including eight million of the most vulnerable households receiving £1,200 of direct support to help with the cost of living”.

The Government's announcement comes after consumer champion and Money Saving Expert founder Martin Lewis said the Prime Minister and Conservative Party leadership contenders Liz Truss and Rishi Sunak need to agree a package to help consumers.

Lewis decried Boris Johnson’s “zombie government”, accusing it of failing to address the crisis caused by rising energy bills. He warned that decisions on support cannot be delayed until his successor is in office, as households will already start receiving notice of increased bills before the Tory leadership contest concludes and ahead of the energy price cap rising to £3,500 or more in October.

Earlier this week, the Electricity System Operator (ESO) admitted that the UK’s electricity grid faces some “tight” periods this winter amid the ongoing pressures on energy prices.