By Jordan Lemm –
On Thursday, Ofgem made the announcement that there will be an increase in the Energy Bills Cap for residents in the UK. The cap for gas and electricity prices will see a jump up from £1277 to £1971, an increase in costs of £693 annually, which is a huge increase of 54%. The increase is set to affect up to 22 million households currently on default tariffs within England and the rest of the UK, taking effect on April 1st, 2022.
The Energy Bills Cap was first introduced by the Conservative Government in 2019 with the intention of protecting customers from being overcharged by energy providers, doing this by setting a maximum limit that providers can charge for the amount of gas and electricity used.
These recent rising costs come as no surprise, with Kirklees residents, along with the rest of the UK, having first felt the effects of the rising gas and electricity costs in 2021 after the first year of the pandemic.
Ofgem recognises this in their announcement, mentioning that there has been a “rise in global gas prices over the last 6 months”, so the further rise in costs will undoubtedly affect many households in the Kirklees region, especially with the recent rise in the National Insurance payments. The Government, however, has announced a plan set to help residents and families with the burden of these extra price increases.
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In his announcement on Thursday the 3rd of February, the current Chancellor of the Exchequer, Rishi Sunak, proposed a plan in the form of a new Energy Bills Rebate set to cost £9.1 billion. With hopes of this rebate helping “relieve anxiety”, as Sunak puts it, felt among UK residents after this announcement that households could see up to £700 added to their cost of living.
The first step he announced is a plan to provide an upfront discount of £200 in October, for all electricity customers in the UK. This discount shall then be repaid by customers automatically over the next 5 years in annual instalments of £40, beginning in April 2023. According to HM Treasury, this will help ease the rising costs for nearly 28 million households.
On top of this, Sunak’s second plan of action is a Council Tax Rebate, targeted at those living in council tax bands A through D, offering a non-repayable rebate of £150, coming into effect April 2022, it is designed to help those in England who may struggle the most with this recent news.
According to Gov.uk, £144 million worth of funding is also set to be provided to help those residents who may reside in council tax brackets E through H, or for the people who may not pay council tax.
With the Energy Help Loan from Kirklees Council coming to an end in 2016, many residents here may reap the benefits of the new Energy Bills Rebate, but for some £350, most of which is repayable, still may leave them worse off in this huge energy bill cap increase.
What do you think? Has the Government planned to do enough to help residents in the higher living costs situation? Could they do more? Let us know in the comments!