The UK Chancellor of the Exchequer, Rishi Sunak, unveiled a £15 billion package to tackle the mounting cost of living crisis faced by households. This initiative responds to energy regulator Ofgem’s announcement of an £800 increase in the price cap in October. Moreover, UK households already struggle financially due to the previous price cap increase in April 2022, causing stress and worry. Without assistance, over 12 million households could fall into fuel poverty by October. The package will be partially funded by a temporary windfall tax on oil and gas companies, expected to yield £5 billion, and will aid households in paying energy bills.
How will the £15bn be distributed?
In Chancellor Sunak’s announcement in May, he outlined targeted payments aimed at helping the most vulnerable households. Firstly, a payment of £650 will be allocated to each of the 8 million lowest-income families in the UK. Secondly, pensioner households receiving the Winter Fuel Payment will receive an additional £300. Lastly, households receiving non-means-tested disability benefits will receive £150. These payments are projected to reach approximately 22 million households through the government’s new funding.
Furthermore, local authorities will receive an additional £500 million, which they can distribute among low-income households within their council areas. This measure ensures that assistance is tailored and reaches those who need it most.
Additional support from the government
Each household in the UK will receive a one-time payment of £400, replacing the previous repayment requirement of £200. The total amount of financial aid for the lowest-income households is estimated to be £1,200, aligning with the predicted energy bill increase for the remainder of the year, including Ofgem’s anticipated rise in October.
Chancellor Rishi Sunak’s £15 billion package demonstrates the government’s commitment to addressing the escalating cost of living crisis. By implementing a temporary windfall tax on oil and gas companies, significant funds will be available to alleviate the burden on households facing rising energy costs. The payment structure, targeting the most vulnerable families, aims to provide essential support. Additionally, the allocation of £500 million to local authorities empowers them to offer tailored assistance to low-income households. These measures aim to mitigate the financial strain faced by millions of UK households and combat the growing issue of fuel poverty.
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