Millions of struggling households across the UK have started to receive extra financial help to help cope with rising prices. A £400 energy discount will be rolled out in six monthly instalments from October, and those on the lowest incomes should have received the first part of a £650 cost of living payment in 1 July.
The £15bn support package announced by Rishi Sunak, who was Chancellor at the time (26 May 2022), aims to ease the squeeze felt by millions of Britons during the . The plans will be funded by a temporary windfall tax on energy companies – a policy which has faced fierce opposition from some cabinet ministers in the past.
The support will be on the same terms in every part of the UK, including Northern Ireland. Measures have also been taken to ensure local government and energy companies deliver cost of living payments to customers who are most vulnerable, or at risk of falling through the cracks.
Plans to give all domestic electricity customers a £200 credit on their energy bill in October 2022 – to be repaid over five years – have been scrapped.
Instead, the Energy Bills Support Scheme will give all households twice that amount; a £400 discount will be paid as a credit onto your energy bill in instalments from October 2022 to March 2023, and it won't need to be paid back.
While this will help ease the strain for a lot of households, it won't cover the full cost of energy price rises.
Households not eligible for the Energy Bills Support Scheme, such as residents of park homes, will receive equivalent payments via a separate scheme at a later point. The details of this will be announced later in the year.
As well as the £400 discount, targeted support for pensioners, those on low incomes and those with disabilities will also be coming later this year.
The then-Chancellor announced that 8m of the lowest income households in the UK will each receive a £650 cost of living payment, bringing the total support to more than £1,000.
To be eligible, you must be receiving certain means-tested benefits. This includes Universal Credit, tax credits, pension credit and other means-tested benefits.
The money will be paid directly into people’s accounts from the Department for Work and Pensions (DWP) in two lump sums.
The first payment of £326 started being paid to the qualifying 8m UK households from 14 July, with the second payment of £324 to follow in the autumn. Payments from HMRC for those receiving tax credits will follow shortly afterwards.
If you are disabled and are one of the six million people who receive non-means-tested disability benefits, you will be given an extra one-off cost-of-living payment worth £150.
Any disabled people who also receive means-tested benefits can receive the £650 payment in addition to the £150, bringing the total payment to £800.
To be eligible for the Winter Fuel Payment, you must be born on or before 26 September 1956. Payments are between £100 to £300, depending on your age and circumstances.
Those on lower incomes who claim pension credit will also receive the £650 as part of the means-tested benefits package above.
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In England, Scotland and Wales, the £400 energy discount will be paid in six instalments, with households seeing £66 knocked off their energy bills in October and November, and £67 a month from December to March 2023.
However, the money will be paid differently depending on how you pay your bill.
If you've set up a direct debit, or pay by card, the money will be automatically credited to your energy account, reducing what you need to pay.
Customers with 'smart' prepayment meters will have the money applied to their meter each month, so they'll have to add less credit to their meter.
Those with 'non-smart' traditional prepayment devices will receive either 'Special Action Messages' or vouchers from their supplier in the first week of each month, via text, email or in the post. The voucher will be redeemable at top-up points, such as a local Post Office, and the discount will be credited to the meter key. It's therefore important your supplier has your current, up-to-date contact details.
This has raised concerns, as these kind of meters are often used by the poorest and most vulnerable households, and being paid the discount in this way could leave them more exposed to fraudsters.
It hasn't yet been confirmed how the energy discount will be paid to households in Northern Ireland.
As already mentioned, the £650 cost of living support money will be paid directly into eligible people’s accounts from the Department for Work and Pensions (DWP) in two lump sums. The first of which will be paid from 14 July.
Steps are also being taken to ensure that vulnerable groups that are more likely to pay bills by cash and cheque, and who may not have already registered their bank details, are identified and don't miss out on the government's cost of living support.
The service – a banking security measure that helps to make sure payments aren't sent to the wrong bank or building society account – is working with payment system provider PayPoint to ensure these customers are given alternative ways to access the funding, and are not excluded.
Note that scammers have been using the cost of living crisis as a means of duping people into making payments and/or handing over their bank details, so make sure any communication you receive purporting to be from from DWP, your energy supplier or any other organisation is legitimate.
There is no need to apply for the energy discount, and the government will not ask for your bank details - so watch out for any communication that suggests otherwise.
Rocio Concha, Which? director of policy and advocacy, said: 'Fraudsters are relentless in their pursuit of people's personal information and money, and there has been a huge jump in energy-related scams exploiting the cost of living crisis, so consumers should be really wary of suspicious texts, emails or letters using the energy bills discount as a hook.
'While energy suppliers will be reaching out to customers about the discount, it is important to note that they will never ask for bank details. Customers on traditional prepayment meters who will receive the rebate via vouchers can prepare by making sure their contact details are up to date and looking out for letters from their supplier, but it is also incumbent on suppliers to make clear to customers how and when they will be communicating with them to avoid potential confusion.
'Which? encourages energy suppliers to sign up to its SMS best practice guide for businesses, to make it easier for consumers to spot scam texts impersonating suppliers.'
Millions of Britons started receiving the first part of the government’s £650 cost of living grant on Thursday 14 July. However, some eligible households are still waiting for the £326 lump sum to arrive in their bank accounts.
The first thing to check is whether you are eligible. Only people who are currently on means-tested benefits will receive the money from the Department for Work and Pensions (DWP).
You must have received at least one of the following benefits between 26 April 2022 and 25 May 2022:
If you are eligible but haven’t got the money yet, don’t panic. Payments are being staggered and everyone should receive the first instalment by 31 July.
The only exception is people on working tax credit. They won’t get the first payment until autumn. The second half of the grant worth £324 will follow in the winter. Exact dates are yet to be announced.
If your circumstances are more complex, you may have to wait longer. For example, if you applied benefits within the qualifying time period but your application has yet to be approved by the DWP.
Another reason for the wait might be because you recently changed your bank details but didn’t inform the DWP. In this case, the payment may have been sent to the wrong account and therefore been rejected.
If this happens, the DWP should follow up with you. However, if you’re unsure, get in touch with the DWP directly and provide the correct details to prevent further delay.
In order to help those who may 'fall through the cracks' – for example, people on housing benefit who are not claiming any other benefits – Sunak said the government will extend the Household Support Fund, delivered by local authorities, by £500m from October.
The Household Support Fund is a measure that provides households with payments to help with essentials such as food, utilities and clothing. It was first introduced in September 2021 and was due to run until 31 March 2022, before being extended. Half of the fund is set aside for households with children.
In addition to the one-off payments, Sunak confirmed that the state pension triple lock would be reinstated for 2023-24; it was temporarily changed to a 'double lock' for this year due to high inflation.
This means state pension payments will increase by either wage growth, September CPI inflation, or 2.5% – whichever is highest.
Seeing as the Bank of England predicts that inflation will average at 9% for the rest of the year, it's likely pensioners will see their payments increase by much more than usual next April.
Benefit payments will also increase by September's CPI inflation, providing an uplift for claimants next year.
This article was first published on 26 May and has updated since then. It was last updated on 15 August to provide further details on the energy discount payment.