By Salma El-Sakka
The UK government will pay £100 directly to about 20 million households in council tax bands A to D this winter at a cost of £2.6 billion, Chancellor John Healey announced in his Budget statement on Wednesday. The payment aims to give “breathing space” on energy bills, but campaigners warn it will barely dent a predicted 22% rise in the price cap come January.
Price cap rises and further increases forecast
Ofgem’s price cap increased by 3.6% to £1,723 for a typical household on 1 October, and analysts forecast a further rise of around 22% in January. Wholesale gas prices have tripled since February, driving the sixth consecutive winter of high energy costs.
Campaigners criticise limited support
Simon Francis, co‑ordinator of the End Fuel Poverty Coalition, said the Chancellor “talked the talk on energy bills, but ultimately failed to walk the walk.” He argued the one‑off payment may not even be spent on heating and that longer‑term measures such as extending the VAT cut on electricity until July and moving gas standing charges to unit rates are welcome but insufficient.
Concerns over standing charge reform
Shifting gas standing charges onto unit rates from 2027 could benefit lower‑use households but risks penalising high‑use, low‑income homes, including those with poor insulation or health needs. Cornwall Insight said savings would be small relative to recent bill increases, though the change could boost heat‑pump adoption. Energy UK and Uswitch.com echoed the need for careful implementation and targeted support for vulnerable consumers.
Additional measures announced
The Budget also extends the VAT cut on electricity bills to July and commits to moving older renewable contracts to fixed pricing to weaken the link between gas and electricity prices. The Treasury said the standing charge changes would take effect “in 2027 or as soon as possible after.”
