Boris Johnson is set to announce energy bill rebates worth billions of pounds to reduce the impact of soaring fuel prices, it was reported last night.
The Prime Minister gave the green light to state-backed loans to limit the impact of soaring energy prices on household bills, after Tory MPs told him to address cost-of-living issues if he is to keep his job.
The ‘rebate and clawback’ scheme, which Mr Johnson and Chancellor Rishi Sunak are both said to have approved, will mean a rebate of £200 for every household allowing taxpayers to underwrite loans to energy firms.
Every household will be given the money in the form of a rebate on energy bills by companies, who will be offered £6 billion in loans.
Boris Johnson and Chancellor Rishi Sunak are said to have approved plans for £6billion in state-backed loans to limit the impact of soaring energy prices on household bills by giving a rebate of £200 to every household through energy companies that will be paid back when prices drop
This plan will make it less of a financial strain for taxpayers once energy prices rise in April. But consumers will have to pay back the loan for companies in years to come, once energy prices decrease.
Ministers have already agreed to the scheme and it could be announced as early as Thursday, sources have told The Times.
‘This is not about propping up the balance sheets of energy companies,’ one told the paper. ‘Every penny they get in loans will be passed on to consumers in the form of rebates.’
The Prime Minister and Chancellor are also looking at other methods to reduce the financial burden for poorer households, such as extending the warm homes discount.
Some 66 per cent of adults told a survey for the Office for National Statistics (ONS) that their cost of living has increased in the past month, with the majority (79 per cent) blaming a surge in gas and electricity bills
Stats show the poorest 10% of households spend more of their disposable income on their utility bills
Council tax rebates and increased benefits have also been under consideration.
There are also some risks attached to the plan, with experts warning that the price of gas is likely to stay twice as high as normal until 2025, contradicting the idea of levelling out the cost of energy for consumers over the next couple of years.
The problem could be further worsened if Russia invades Ukraine.
It comes as energy regulator Ofgem is set to confirm a new energy price cap on February 7, where it is expected to rise by about 50 per cent to £2,000 a year on April 1.
Office for National Statistics (ONS) data has already found more than one in five Britons are cutting back on energy usage ahead of the expected spike in gas and electricity prices.
Some 66 per cent of adults said that their cost of living has increased in the past month, with the majority (79 per cent) blaming a surge in gas and electricity bills.
Of these, just under a third said they were already cutting back on spending on fuel such as gas and electricity, while more than half are spending less on non-essentials.
Meanwhile a quarter are being forced to dip into their savings.
Rishi Sunak and the Prime Minister were yesterday accused of acting like Thelma and Louise by preparing to ‘drive off the cliff’ after they ‘nailed themselves to the mast of the National Insurance rise coming in this April’. Pictured: Mr Sunak at Treasury questions yesterday
Chancellor Rishi Sunak faces mounting calls to ease the cost of living crisis which has arisen from soaring fuel costs, record inflation levels and a rise in National Insurance contributions to pay for social care.
The Treasury has already rejected calls from some MPs to cut VAT on fuel bills, which Mr Sunak has said would cost £2 billion a year.
And prior to news of the rebate, Mr Sunak and the Prime Minister were yesterday accused of acting like Thelma and Louise by preparing to ‘drive off the cliff’ after they ‘nailed themselves to the mast of the National Insurance rise coming in this April’.
There are also some risks attached to the plan, and the problem of soaring gas prices could be worsened if Russia invades Ukraine in the coming weeks. Pictured: The Prime Minister meets with Ukrainian President Volodymyr Zelenskiy in Kyiv
At Treasury questions in the Commons, former work and pensions secretary Stephen Crabb highlighted the predicted cost of living crisis facing families in the spring when the NI hike comes in at the same time as gas costs amid rising inflation.
The 1.25 percentage point National Insurance increase is expected to raise £12 billion a year for health and social care services, but breaks Boris Johnson’s 2019 election manifesto commitment not to raise taxes.
Pat McFadden, Labour’s shadow chief secretary to the Treasury, told MPs: ‘On Sunday, the Prime Minister and the Chancellor nailed themselves to the mast of the National Insurance rise coming in this April. Like Thelma and Louise, they held hands and they are going to drive off the cliff.
Facing Mr Sunak, he added: ‘So, I ask him, why should the cost-of-living crisis be made much worse for families this year just to fit in with the Tory Party’s planning grid for the next election?’
Mr Sunak insisted there are a range of measures the Government has put in place to help people with the cost of living, saying: ‘Not least the national living wage going up £1,000 a year, the cut to the Universal Credit taper rate, the freezing of fuel duty and so on.’
In regards to funding the NHS, the Chancellor said it is the ‘people’s number one priority’ and it can ‘only be done with a sustainable funding stream’.