The Chancellor Rishi Sunak is poised to unveil a £10bn package of emergency support to help households struggling with soaring energy bills, it was reported on Thursday.
Surging wholesale prices, pushed even higher following Russia’s invasion of Ukraine, had seen household bills shoot up. In April, average bills rose 54% to £1,971 and Ofgem, the regulator, on Wednesday acknowledged they were likely to increase again to around £2,800 in October when the price cap is next reviewed.
Ofgem has warned that around 12m households face fuel poverty as a result.
Sunak announced various measures intended to help with the cost of living crisis in his Spring Statement, but was criticised for not going far enough. Households were promised a £200 reduction on energy bills, but in the form of a loan that had to be repaid to the energy companies.
However, it is now understood that the loan will be turned into a grant, and could be increased.
The entire package – which is expected to be announced on Thursday – is thought to be worth around £10bn, according to multiple media reports. It will focus primarily on the poorest households and pensioners. A windfall tax on energy companies’ excess profits is expected to help fund the package.
The support has been agreed with prime minister Boris Johnson, who is keen to “move on” following the publication on Wednesday of Sue Grey’s highly critical report into the various parties held at Downing Street when the country was in lockdown.
The government had initially resisted calls by Labour for a windfall tax on energy companies’ excess profits, arguing that it wold hamper investment in green technology and infrastructure.
However, it is understood that the sector is now increasingly resigned to a tax.