Only suppliers with at least 250,000 customers are required to make the payments, and a number of the big firms including EDF, Scottish Power and Utility Warehouse have now closed their schemes for 2021-22.
In December the charity AgeUK said more than 900,000 eligible pensioners were missing out on pension credit payments because they had not applied.Īnother group – those on low incomes and in receipt of a small number of benefits mostly open to people with disabilities or a child under five – are also eligible for WHD, but they have to apply for the money and hope their energy supplier is still accepting applications. Pensioners in receipt of pension credit automatically receive the money paid directly to their supplier. Currently, households on a low income and in receipt of certain benefits receive £140 off their electricity bill, a sum that has not increased in nine years. The warm homes discount (WHD) will need an overhaul if it is to come close to filling the expected £700-a-year increase in domestic gas and electricity bills due in April. Expanding warm homes/winter fuel allowance It would mean that retail prices do not fall when wholesale prices drop, and would bake in higher energy prices for years to come. The suppliers could borrow cheaply from the Treasury over the coming months and then repay loans from bills over subsequent years. If the government comes forward with a loan scheme for the industry, it would allow energy suppliers to smooth out the recent rise in costs over several years. The regulator Ofgem could limit the rise in the energy price cap when it conducts a six-month review in April. But a decision to scrap the reduction would benefit the better off as well as those on lower incomes, making it another blunt instrument. The leader of the House of Commons, Jacob Rees-Mogg, a low-tax campaigner, told his cabinet colleagues this week it would be bad politics to impose such a large burden on the workforce at a time of rising living costs. Reversing the national insurance hikeĪ 1.25% rise in national insurance contributions for employees and employers from April, labelled the health and social care levy, will raise £14bn for the exchequer. Johnson has recently distanced himself from making the change, calling it a “blunt instrument”. Labour has supported calls for a cut as a first move to supporting all those affected by the rising cost of living. But the cut would offset only £75 to £100 of the expected £700 rise in bills. It was a move promised in the Brexit campaign by Boris Johnson among others as a mark of independence from EU VAT rules, and would help about 20m to 23m households.
VAT cutĪt a cost of £2bn, Rishi Sunak could cut the 5% VAT rate on household energy. The government has options, but all have political and financial costs. Kwarteng said he wanted to ease the pain on businesses and households, but he is up against a chancellor keen to maintain a tight hold on public finances. The next review is expected to push bills up by 50% to nearer £2,000. The last price cap increase, in October, pushed bills to an average of £1,277 a year for a dual-fuel bill.
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