Rishi INSISTS energy price cap relief ‘right thing to do’ amid bill boost for low-income homes

Support will be delivered in three ways

Firstly, Rishi Sunak announced customers will receive an upfront discount on their bills.

Rishi Sunak said: “First, we will spread the worst of the extra costs of this year’s energy price shock over time.

“This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.

“Energy suppliers will apply the discount on people’s bills from October.

“With the government meeting the cost in full.

“That discount will be automatically repaid from people’s bills in equal £40 instalments over the next five years.

“This is the right way to support people while staying on track with our plans to repair the public finances.”

“If we don’t take this action, it would be even worse”

Andrew Bailey, Bank of England’s governor, has said in response to accusation that the interest rate increase has come at the worst time, that ‘If we don’t take this action, it would be even worse. ‘

He continued by saying he ‘knows it’s a hard message’ but the move came as part of an attempt to curb a rapid rise in the cost of living.

He explained that the move was ‘necessary because it is unlikely that inflation will return to target without it.’

Andrew Bailey spoke at a news conference following the Bank of England’s decision to raise interest rates to 0.5%.

Ofgem suggest the price cap could be adjusted more frequently

It has been suggested by Ofgem that the energy price cap could be adjusted more frequently.

The regulator’s chief executive, Jonathan Brearley, told the BBC that they are still considering the move.

Brearley said the changes would mean « when prices go up it adjusts, but it will equally quickly adjust when prices come back down again”.

By doing so they hope to ease pressure on both energy suppliers and consumers.

Currently the price cap is reviewed every six months and the next time it could change will be August.

Conservative members praised the package

Senior Conservative backbencher Robert Halfon praised the Chancellor’s response.

He told the Commons: « This is a cost of living package for white van men and women across the country. »

And fellow Tory Mark Harper, a frequent critic of No 10 over Covid rules, also backed the measures.

He said: « The Chancellor is responding to a global energy crisis with honesty and a package of targeted support after listening to backbench MPs’ views. »

Conservative MP for Wolverhampton, Jane Stevenson added: « This is quite simply a superb plan. »

Tory MPs split over the Chancellor’s announcement

Ex Brexit Secretary David Davis said: « It is obvious we have to help families with the cost-of-living crisis, but the way we are doing it is strategically wrong.

« Charging people £100s extra on everything from fuel to income, and handing it back in drips and drabs will never work long-term. »

Fellow backbencher Peter Bone confronted the Chancellor and suggested the Government’s high tax, high spend polices are « socialist ».

He said: « Conservatives believe in holding taxes down and putting more money in people’s pockets so they can decide how to spend it.

« Socialists believe in raising taxes and then choosing to give it back in the form of discounts and rebates to selected people the Government thinks need it. »

Mortgage repayments could be affected

When, and if, your mortgage repayments are affected by an interest rate change will depend on what type of mortgage you have and when your current deal ends.

If you have a variable rate tracker mortgage, linked to the Bank of England base rate, then you are likely to see an immediate impact on your mortgage repayments if there is an interest rate rise.

Those on a standard variable rate mortgage will probably see an increase in their rate of repayment, but your lender decides how much that is, so it could be more or less than the Bank of England increase.

The latest data from UK Finance shows that 26% of residential mortgages are on variable rates.

This means the changes will affect around 2.2 million borrowers.

What will happen if you have a loan, credit card or overdraft?

Most unsecured borrowing such as car finance won’t usually be affected by an interest rate change.

This is because you agreed to pay a fixed rate of interest when you took out the loan.

But it is possible for the interest rate on your credit card or overdraft to rise.

Many customers of big providers such as Lloyds Bank, MBNA, Halifax and Barclaycard have their credit card rates directly linked to Bank of England base rate, so they will move automatically with any changes.

You’ll be given notice before this happens, subject to the terms and conditions of your account.

Interest rates rise to 0.5% adding £700 a year to mortgages for 2million homeowners

The Bank of England has raised interest rates to 0.5% – its second increase to the base rate in two months.

The decision comes just an hour after the new energy price cap was announced, and will add £700 a year to over 2million mortgage bills.

Analysts had widely expected the central bank’s Monetary Policy Committee to increase the official interest rate from 0.25% to 0.5%.

The Bank of England caught many people off guard in December 2021 when its members voted to lift rates to 0.25% from a historic low of 0.1%.

It was the first increase in more than three years but commentators were expecting action again today as the rate of inflation, which measures the cost of living, has soared.

The inflation rate is currently at a 30-year high of 5.4% thanks to high energy and food prices.

Increasing the bank rate is a common lever for slowing down inflation.

But when the Bank of England raises interest rates, the cost of borrowing increases.

Rishi Sunak refuses to get rid of VAT on energy bills

He said getting rid of VAT would « disproportionately benefit wealthier households » and turn into a permanent subsidy costing £2.5bn a year.

Speaking in the Commons he also swatted aside Labour calls for a windfall tax on energy firms saying it would « deter investment » in Britain.

Rishi Sunak outlines how the £200 discount will work

Rishi Sunak said: « This year all domestic electricity customers will get an upfront discount on their bills worth £200.

« Energy suppliers will apply the discount on people’s bills from October, with the government meeting the cost in full. »

« That discount will automatically be repaid from people’s bills in equal £40 instalments over the next five years. »

The full details of how the scheme works have not yet been announced, but we’ll update here when they are.

One-off discount of £200

The Chancellor announced every home in Britain will get a one-off discount of £200 on this winter’s energy bills.

But it will be funded using taxpayer-backed loans, meaning providers will have to claw back the money in future via higher long-term prices.

Rishi also unveiled an emergency Council Tax cut for households in bands A-D, which will be worth £150 to the average family.

But that won’t even cover the cost of the upcoming National Insurance hike which will wallop workers for an extra £180 on average.

Energy bill rebates will be repaid £40 a month from April next year

Households will have to repay energy bill refunds in monthly instalments of £40 from April 2023.

Chancellor Rishi Sunak today announced that all energy customers will get a £200 discount on their energy bill.

The support is to help struggling Brits cover the cost of gas and electricity, as bills are set to soar £693 a year for around 22million consumers.

Customers will then pay back £40 a month from April 2023, when it’s hoped that prices will have dropped.

The full details of how the scheme works have not yet been announced, but we’ll update here when they are.

Labour’s shadow chancellor criticises Sunak

Rachel Reeves, Labour’s shadow chancellor has criticised Sunak for not getting rid of VAT on energy bills.

She said despite the pledges the « uncomfortable truth » is that families in Britain will still be paying hundreds of pounds more for energy after April.

She went on to say how millions of people will be cutting back to pay the bills.

£150m to go to Northern Ireland

It was confirmed by the chancellor that the energy bill help only applies to England, Scotland and Wales, as Northern Ireland has it’s own system.

However, he has said he will provide £150m to Northern Ireland for them to provide their own support.

What help can I get with my energy bills?

On top of the £200 energy bill rebate announced today, there’s other help you can get if you’re struggling with energy bills.

In the first instance it’s best to speak to your supplier directly if you are struggling to pay your bill or are worried about falling behind.

It’s best to do this sooner rather than later as failed direct debit payments could cost you extra and affect your credit score.

Many suppliers run their own schemes offering help, or have charitable trusts to help pay arrears.

British Gas Energy Trust, for example, runs a scheme where anyone can apply for a grant, and you don’t even have to be a customer.

Other firms that offer grants just to their customers include:

What will happen if you have a loan, credit card or overdraft?

Most unsecured borrowing such as car finance won’t usually be affected by an interest rate change.

This is because you agreed to pay a fixed rate of interest when you took out the loan.

But it is possible for the interest rate on your credit card or overdraft to rise.

Many customers of big providers such as Lloyds Bank, MBNA, Halifax and Barclaycard have their credit card rates directly linked to Bank of England base rate, so they will move automatically with any changes.

You’ll be given notice before this happens, subject to the terms and conditions of your account.

Cost of living crisis heightened amid rising energy costs and inflation

The cost of living crisis was majorly highlighted today as Rishi Sunak unveiled measures to offset a spike in energy bills.

It came on the same day that the Bank of England warned inflation will hit its highest point in over three decades.

Energy bills are set to soar by 54% for 22 million households from the beginning of April, adding £693 to the annual bills of a typical household.

Meanwhile, inflation is set to hit an eye-watering 7.25% in April, according to new Bank of England forecasts released on Thursday.

The prediction would mean that disposable incomes would fall by around 2%, according to Bank estimates, the worst impact since records began in 1990.

The Bank hiked its base interest rate from 0.25% to 0.5%, a move it hopes will take some pressure o

Boris’ premiership rocked after aides quit and Chancellor criticises PM

The PM’ has faced more threats to his leadership tonight after the resignation of two key aides – while Chancellor Rishi Sunak criticised him during a broadcast from Downing Street.

Munira Mirza, who had been one of the PM’s most loyal and longstanding advisers, quit over his use of a « scurrilous » Jimmy Savile smear.

She told the Prime Minister she was departing as No 10’s head of policy because he refused to apologise for the widely criticised attempt to tarnish Sir Keir Starmer.

Then came the resignation of Jack Doyle, No 10’s director of commutations who was embroiled in allegations of lockdown-breaching parties in Downing Street.

In a live broadcast on the cost-of-living crisis, Mr Sunak praised Ms Mirza as a « valued colleague » and criticised the Prime Minister’s Savile remarks, saying: « I wouldn’t have said it. »

Earlier in the day, the Chancellor did not rule out a leadership bid if Tory MPs force out Mr Johnson over allegations of lockdown-breaching parties in Downing Street.

Recap: What did Rishi say about today’s energy price cap hike?

The Chancellor said there could be a further price hike later in the year due to an « unpredictable » energy market.

Mr Sunak also told a Downing Street press conference that energy price rises are « so significant » they will hit middle-income households as well as the poorest families.

Disposable incomes will fall by around 2%, according to Bank estimates, the worst impact since records began in 1990.

Increased energy bills, even with the new support from the Government, will push four million households into fuel poverty – double the current amount, according to the Resolution Foundation think tank.

The squeeze comes as oil giant Shell revealed a 14-fold increase in profits as the company benefited from the spike in global prices.

Boris defends energy cost relief package (continued…)

. »Speaking to 5 News, he said: « We know the cause, it’s been driven by inflation in energy costs around the world, particularly the gas price spike that we are seeing. We have got to help people, I think that Rishi’s package is extremely good. »

He did not directly answer a question, also raised in Parliament, about a windfall tax on fuel companies like Shell, which have profited from the spike in global prices.

He said the world is experiencing a « bumpy period post-Covid » with « inflation, blockages in supply chains as the global economy recovers ».

He added: « I think when it comes to taking huge sums of taxpayers’ money, £9.1 billion, transferring it to help people with the cost of their heating and their energy, everybody can see that that’s a massive commitment. »

Boris Johnson defends energy cost relief package

Boris Johnson has defended the Government’s package to ease the impact of the cost-of-living crisis after the Chancellor said he could not rule out further rises later in the year.

Rishi Sunak on Thursday announced a £9 billion package, including a one-off repayable £200 discount and a £150 rebate on council tax bills, and £144 million to councils to support vulnerable households amid surging energy prices.

The Chancellor added he « doesn’t have a crystal ball » and warned households they will have to adjust to higher energy prices in the future.

Shadow chancellor Rachel Reeves branded it a « buy now, pay later scheme that loads up costs for tomorrow ».

The Prime Minister defended the measures as a « mega package », adding: « I don’t think we have seen anything like it in recent memory. »

Rishi rejects calls for windfall tax on energy companies

Rishi Sunak rejected calls for a windfall tax on energy companies making profits while customers struggle to pay rising bills.

The Chancellor told The Martin Lewis Money Show such a levy would « deter investment ».

Mr Lewis asked the Chancellor: « People have said… why the hell are they having to pay money back when energy companies are publishing – the big ones – record profits? »

Mr Sunak said a windfall tax « does sound superficially appealing », but added: « I don’t think a windfall tax is the right thing to do, most obviously because it will deter investment. »

He said more investment was needed in the North Sea, which he claimed would help to boost the economy and employment levels.