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29 Jul 2022

Every household to get £400 energy grant in cost of living measures

Households will receive the energy grant in six instalments, starting from October
Energy bill price cap worry

Millions of struggling households across the UK have started to receive extra financial help to help cope with rising prices. A £400 energy grant will be rolled out in six instalments from October, and those on the lowest income will receive the first part of a £650 cost of living payment by 31 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 cost of living crisis. 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.

A raft of measures were announced in February to help with the cost of living, but the government had been under increasing pressure to go further. 

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.

Here, we break down the measures the government is now planning to roll out. For more help with the increasing cost of living, head to our money-saving advice.

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One-off £400 energy grant for all households

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, all households will receive twice that amount. £400 will be paid as a credit onto your energy bill in instalments from October, 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. 

Read more: If you're trying to cut down your energy usage, find out 10 ways to save on your energy bills

Additional payments for vulnerable groups

As well as the £400 grant, targeted support for pensioners, those on low incomes and those with disabilities will also be coming later this year.

£650 for those receiving means-tested benefits

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.

£150 for those receiving non-means-tested disability benefit

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.

£300 for pensioners receiving Winter Fuel Payment

Finally, pensioners who currently receive the government’s Winter Fuel Payment – set up to help cover the costs of energy bills during the colder months – will be given an extra one-off sum of £300 in the autumn.

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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Read more: Find out what help is available if you're struggling to pay your energy bill

How will the money be paid?

Energy grant payments

In England, Scotland and Wales, the £400 energy grant 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 account. 

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' prepayment devices will be given a voucher 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. 

This has raised concerns, as these kind of meters are often used by the poorest and most vulnerable households, and being paid the grant in this way could leave them more exposed to fraudsters.

It hasn't yet been confirmed how the energy grant will be paid to households in Northern Ireland.

Cost of living payments

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 Confirmation of Payee 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.

Watch out for scammers

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. 

Our story on cost of living scams to watch out for can help you spot the fraudsters.

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.'

Why haven’t I received July’s cost of living payment?

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:

  • Universal Credit
  • Working tax credit
  • Pension credit
  • Child tax credit
  • Income-based jobseeker’s allowance
  • Income-related employment and support allowance
  • Income support.

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.

Other cost of living help

Extension of the Household Support Fund

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.

State pension triple lock confirmed

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 29 July to provide further details on the energy grant payment.