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Households to receive up to £350 to tackle cost of living squeeze

The chancellor has set out a series of measures intended to help households tackle the soaring cost of living.

Speaking shortly after energy regulator Ofgem announced average energy bills would rise by £693 this year, and the Bank of England increased the cost of borrowing, Rishi Sunak told MPs that the government would provide “direct support” for households.

Under the measures announced, all domestic electricity customers will now receive a £200 rebate from their supplier from October, with the taxpayer meeting the cost. The discount will be automatically recovered from people’s bills over a five-year period, starting from 2023.

The government said wholesale gas prices are expected to start falling from next year, although some analysts have predicted prices will not ease significantly until 2025, especially if hostilities increase between Russia and Ukraine or if winters are particularly severe.

The Warm Home Discount will also be extended, to cover around 3m vulnerable households in total.

Meanwhile, households in England which are in council tax bands A to D will also receive a £150 rebate from April, made directly by local authorities, which will not be repaid.

There will also be discretionary funding of £144m to help vulnerable people, individuals on low incomes that do not pay council tax, and those on a lower band. The higher the value of a property, the lower the council tax band.

Sunak told MPs that the package of measures was worth around £9bn.

In a statement, he said: “I know the number one issue on people’s minds is the rising cost of living. That’s why the government is stepping in with direct support that will help around 28m households with their rising energy costs over the next year.”

Earlier on Thursday Ofgem said that around 22m households will be affected by a 54% rise to the price cap, which comes into effect from 1 April. Those on default tariffs paying by direct debit will see an increase of £693, from £1,277 to £1,971, while prepayment customers will see an even larger hike, from £1,309 to £2,017.

The BoE, meanwhile, upped interest rates to 0.5% on Thursday, its second consecutive increase to the cost of borrowing.

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