Jeremy Hunt announced a three-month extension to the energy price guarantee in his 2023 Budget.

The guarantee, which currently caps bills for the average household at £2,500 a year, will now remain at that level until June. It was due to expire on 1 April.

The increase would have doubled the number of people unable to afford their energy bills from one in 10 to one in five. However, households will still see their bills increase, as the £400 grant that has been issued in monthly instalments since October is coming to an end.

Here’s how energy bill support will work from April, and the remaining Government payments explained.

How does the energy price guarantee work?

The Government introduced the energy price guarantee as a temporary replacement for the energy price cap in order to protect consumers from sharp price increases, after Ofgem announced a planned 80 per cent hike to the cap last autumn.

Under the guarantee, suppliers have been further restricted in what they can charge households per unit of energy, with the Government making up the difference.

The average household will pay £2,500 per year on their energy bills under the guarantee, though the actual amount people will pay varies depending on their usage.

The guarantee was due to rise £500 to £3,000 in April, but this will no longer happen. It will remain at £2,500 until June. After this, households and energy firms will again be beholden to the price cap.

While many billpayers will breathe a sigh of relief, critics say Mr Hunt’s plan falls far short of what is needed to prevent millions of households slipping into, or remaining trapped in, fuel poverty.

When does the monthly energy grant end?

A £400 energy bill rebate has been paid to every household in the country, without means testing, since October.

People received instalments of £66 in October and November 2022, rising to £67 per month from December through March 2023. Most people should already have received their final payment.

Unlike the low-income, disability and pensioner support, this scheme has not been extended, meaning it will end after March, and people will have to pay more on their energy bills.

What other cost of living support is there?

The following support has been announced for 2023:

  • £900 payment for more than eight million eligible means-tested benefits claimants
  • £150 for over six million disabled people
  • £300 for more than eight million pensioners on top of their winter fuel payments

Here is a breakdown of each one, and when they are expected:

£900 low-income payment

This will be paid to people who receive the following benefits:

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

The money will be paid in three separate payments over the course of the financial year, starting in the spring. Exact payment windows will be announced closer to the time, but are spread across a longer period to ensure a consistent support offering throughout the year, the Department for Work and Pensions (DWP) said. DWP has issued the following guideline:

  • £301 – first payment during spring 2023
  • £300 – second payment during autumn 2023
  • £299 – third payment during spring 2024

That means people will receive £601 this year, with the remaining £299 in 2024. The slightly different payment amounts are to make it easier for DWP and HMRC to track which grants people have received, in order to minimise fraud risk.

Claimants who are eligible for any of the payments and receive tax credits, and no other means-tested benefits, will receive payment from HMRC shortly after DWP payments are issued, as was the case with the previous £650 grant.

The payments will be tax-free, will not count towards the benefits cap, and will not have any impact on existing benefit awards.

£150 disability payment

A £150 disability payment will be awarded to people who receive any of the following:

  • Disability living allowance
  • Personal independence payment
  • Attendance allowance
  • Scottish disability benefits
  • Armed Forces independence payment
  • Constant attendance allowance
  • War pension mobility supplement

The payment will be made in summer 2023. The payment will be tax-free, will not count towards the benefits cap, and will not have any impact on existing benefit awards.

£300 pensioner payment

DWP is extending the £300 boost to the winter fuel payment that was issued in 2022. It will be paid in winter 2023-24. The winter fuel payment, also referred to as a “heating allowance”, is an annual tax-free payment from the DWP for older people.

Anyone who is eligible normally receives £100-£300 each year. The amount you get depends on when you were born, your living situation and the type of benefits you receive. The £300 comes on top of this.

You do not typically have to apply for the winter fuel payment if you are eligible. You should receive the money automatically. If you have not had the payment before, you will need to claim if any of the following apply:

  • You do not get benefits or a state pension
  • You only get housing benefit, council tax reduction, child benefit or universal credit
  • You get benefits or a state pension but live in Switzerland or a European Economic Area country
  • You get an adult disability payment from the Scottish Government

You can find more information about the winter fuel payment here.

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