New council tax cut on way for millions – Rishi rebate ‘right thing to do’

Rishi Sunak grilled by Martin Lewis on £200 rebate

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The Chancellor is thought to be considering proposals for a rebate to help shield households from a surge in everyday costs after criticism over his mini-Budget. Mr Sunak faced a fierce backlash after the Spring Statement last week, which experts said did nothing to help those who are going to suffer most. And, after looking at new ways of easing the crisis, cuts in council tax are on the cards.

A Treasury insider said: “We’ve already looked at this and concluded that council tax is the best way to do it.”

The public faces a further surge in fuel bills this autumn.

The energy price cap will jump from around £1,300 to nearly £2,000 on Friday, and it could rise again to £3,000 in October.

Mr Sunak’s first handout in February gave a rebate of £150 to those living in properties in council tax bands A to D, and a £200 reprieve on energy bills, to be paid back over five years.

Government sources have signalled No.10 and the Treasury intend to stick with a principle that the state will step in to cover up to half of any increase in energy costs, so a second council tax rebate could be more generous.

Education Secretary Nadhim Zahawi signalled the Chancellor is planning further help with the cost of living.

He said: “I think he will continue to keep an eye on this, it’s only right.

“It’s irresponsible for me to say ‘job done’ because energy prices are volatile, inflation remains high, so it would be absolutely irresponsible to say ‘job done’.

“But I think £22billion, in one year, of help when you’ve just spent £400billion is the right thing to do.”

Campaigners last night said they would welcome the move.

Caroline Abrahams, charity director at Age UK, said: “Anything that puts more money into the hands of pensioners who are struggling with the rising cost of living is a good thing.

“One of the advantages of using a rebate on council tax as a mechanism is that the administrative system is already in place, at least for those who pay by direct debit.

“For older people who pay in a different way, this approach may not work as well or as speedily. And if the Government was to put conditions on who receives this money according to property band, then older people who have a low income but who are living in a valuable home would lose out, which seems unfair.

“What’s clear is the Chancellor’s Spring Statement was something of a damp squib and did not do enough to help those who need extra support the most. The Government needs urgently to make amends.”

Critics accused the Chancellor of being an “illusionist” as he hailed his “tax-cutting” mini-Budget, despite the burden being on course to reach the highest level since the 1940s.

The Government’s own watchdog has predicted that this year will see the biggest fall in disposable incomes since records began in the 1950s.

Conservative MP Andrew Bridgen said: “Every action taken by the Chancellor helps. But I think it will take more than this to adequately support people through the biggest increase in the cost of living most people have ever seen.”

Mr Sunak is also coming under pressure to increase the state pension to help the elderly through the cost-of-living crisis.

Campaigners have called on the Chancellor to introduce a £500 emergency payment as bills continue to spiral.

Dennis Reed, director of over-60s group Silver Voices, said: “I am not surprised Rishi Sunak has gone back to the drawing board because there is a lot of anger at the inadequacy of his Spring Statement.“The Chancellor needs to look again at increasing the state pension and doing more to help people on benefits.”

Meanwhile, analysis claims Mr Sunak has overseen the biggest real-terms fall in the state pension for half a century.

Labour said the decision to downgrade the triple lock amid soaring inflation will mean a £427 hit this year.

Our guide to help you cope with cost of living

IT IS a tough time for everyone with prices soaring on food, energy bills and petrol while higher taxes will kick in next month for millions, writes Harvey Jones. Our team of personal finance experts brings you the essential survival guide for living well and saving money during the cost of living crisis with top tips and guidance all week.

THE biggest cost-of-living shock will come on April 1 as gas and electricity bills rocket.

The energy price cap jumps by a staggering 54 percent on Friday to £1,971 a year, a rise of £693.

This restriction was brought in to ensure households will always pay a fair price for gas and electricity and it is reviewed every six months.

But experts warn the cap could hit £3,000 in October, forcing some households to pick between heating and eating.

Energy bills are pushing two in five families into debt, with many already in arrears to their energy provider even before costs soar, according to CompareTheMarket.com. Director Alex Hasty claimed the crisis will get worse before it gets better, adding: “Many households are facing significant increases.”

Everybody needs to do all they can to cut the electricity bills but the favourite option of shopping around for a new deal no longer applies.

Since the start of last year, 31 energy companies have shut due to soaring wholesale gas, forcing Ofgem to find a new supplier for two million customers.

There is a lack of deals out there as a result. Many comparison sites suspended their energy service last September due to the restricted number of tariffs available, including GoCompare Energy.

Spokesman Gareth Kloet urged bill payers to take meter readings before the price cap comes into force so you cannot be charged at the higher rate for units used prior to this.

WHAT SUPPORT IS AVAILABLE

THE Government has announced extra support for council tax and energy bills, on top of existing programmes such as the Warm Home Discount and Cold Weather Payment.

ENERGY BILLS REBATE

THIS will give 28 million households an upfront £200 discount on their bills.

Suppliers will apply the discount to all electricity customers in England, Scotland and Wales but not until October. Pre-pay customers should get a voucher or payment via their smart meter.

The Government will recover the rebate from people’s bills in £40 automatic instalments over five years, starting in 2023.A danger is energy bills will stay high for longer with that £40 a month adding to the burden. 

WARM HOME DISCOUNT

THIS offers vulnerable energy customers a discount on their bills and the Government plans to expand eligibility. The payment has remained at £140 since 2014/15 but will increase to £150 from October.

Low income retirees who claim pension credit automatically get the discount but other low-income households must apply. They will get help only if their energy supplier offers the scheme and there is still money available. Around two million could qualify but not all will get it. The cash comes off your bill.

COLD WEATHER PAYMENT

THIS pays £25 for each seven-day period of sub-zero temperatures between November 1 and March 31.

It goes to those on low income who receive benefits including Pension Credit, Income Support, Jobseeker’s Allowance and Universal Credit. Payments are usually awarded automatically but contact your local job centre or DWP office if you think you have missed out.

Nearly four million will be eligible this year, with six cold weather payment “triggers” across British weather stations between November and February 11. Nick Hill, money expert at the Money and Pensions Service, said if you are worried about missing gas or electricity payments, contact your supplier to agree a payment plan.

How to cut your energy use in face of soaring prices

A FEW small adjustments to your home and habits could reap big savings, says Marc Robson, smart energy expert at British Gas. “Every time I visit a customer’s home, I find there’s a little tweak that can help them become more energy efficient.”

TURN OFF THE LIGHTS Do it whenever you leave the room. Replacing all the bulbs in your home with energy-efficient alternatives cuts £40 a year off the typical electricity bill.

SHUT OUT THE COLD Draught excluders are an easy and affordable way to reduce heat loss. As well as sealing the joins around your doors and windows, consider letter-box brushes, chimney balloons and even keyhole coverings.

FIT FOIL PANELS Adding reflector panels behind your radiators will bounce more of the infra-red heat rays back into your room, while less warmth gets lost through the wall.

BE LAUNDRY SMART Always put a full load in the washing machine and try to do a week’s laundry in one go. Its economy setting can save water and energy.

CUT KITCHEN COSTS Turn the oven off 10 minutes before your food is ready as the heat build-up means it will keep on cooking. Leaving the door open afterwards helps warm the room. Cover your pots and pans on the hob.

BE ENERGY SMART If you have a smart meter, check your energy usage to reveal the most energy-consuming appliances and make savings.

LITTLE SAVINGS CAN ADD UP

There are small things you can do to help keep your bills down, said Abigail Yearley of TopCashBack.co.uk.

“Move bulky furniture like sofas and armchairs away from your radiators as they will absorb the heat. Buying thicker curtains will reduce the amount of heat that escapes at night. Shut the doors to the rooms in your home not used during winter and turn off the radiators.”

Martyn Bridges, director of product management at Worcester Bosch, suggests having shorter showers and turning off the water while lathering. “One minute a day could save a fortune on your annual bill with prices so high. Turning down your thermostat by a single degree could save £80 a year.”

Unplugging electronics when not in use, rather than leaving them on standby, saves around £35 a year, says the Energy Saving Trust.

A dishwasher heats up air to dry the dishes. Turning this setting off cuts energy usage.

Only filling the kettle with the amount of water you need saves around £6 a year, the EST said.

A boiler service can pay for itself by boosting your system’s efficiency and reducing the chance of a breakdown.

Kerry’s hopes are unstitched

Business owner Kerry Mackay says soaring energy prices are driving up her fuel bills both at home and work.

Single mum Kerry, 43, from Wrexham, says businesses and ordinary people are being dealt a massive blow by the cost-of-living crisis. Kerry has spent the last three years clawing herself out of poverty.

She was living on Universal Credit and relying on food banks to feed herself and son Jamie, nine. But then she started up a small sewing business, working 90-hour weeks, with her income topped up by child tax credits.

Now she runs ScrubbiesUK, which manufactures a home-compostable alternative to the plastic sponge – but the energy crisis is reviving some unhappy memories.

She said: “Now here I am, three years on, running my business wrapped in a blanket.”

Children fear ”being poor”

ONE in three children are petrified their families don’t have enough money to survive, data shows, writes Giles Sheldrick, Chief Reporter.

The findings from Action for Children come as the cost-of-living crisis spirals out of control. The charity said: “Intensifying money worries and the war in Ukraine will leave children feeling the world is a gloomier place.”

It polled more than 5,000 children and adults on the biggest post-pandemic issues. Nearly half from low-income backgrounds said they worried about money.

Other issues children identified as preventing them from fulfilling their potential are the impacts of Covid, too much pressure from school and poor mental health.

Price of food to rise again

HARD-pressed shoppers are facing the prospect of another hike in food prices, due to increased farming costs.

Analysis by the Energy and Climate Intelligence Unit suggests British farmers could soon face paying an extra £760million for fertiliser as Russia’s war in Ukraine pushes gas prices even higher.

Tom Bradshaw, vice president of the National Farmers’ Union, described rising fertiliser prices as “incredibly concerning” and warned it will be felt by consumers.

He said: “The price is increasing the cost of production on farms significantly and ultimately that cost has got to be passed on the supply chain to our retail customers.”

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