Chancellor announces energy support package in February

The Chancellor announced an energy support package in February 2022, intended to offset about half of the increase in energy bills implied by April's new price cap for most households¹. The measures are delivered largely through Council Tax rebates¹.

From 1 April 2022, energy bills rose by 54 per cent overnight, pushing a typical annual dual fuel bill up by £693 to £1,971 a year¹. Even accounting for the February measures, this pushed 5 million English households into fuel stress, defined as spending more than 10 per cent of after housing cost incomes on energy bills¹. Further pressure is expected: current commodity market prices suggest the price cap could reach around £2,500 in October, which would mean 32 per cent of households, or 7.5 million families in England, in fuel stress, and would see another 2.5 million households fall into fuel stress¹.

The Resolution Foundation, which published the analysis on 1 April 2022, said the design of the Council Tax rebate leaves gaps. It found that 640,000 of the poorest families, in the lowest three income deciles, will miss out on support because they live in properties in Bands E to H, while around half of those in the top income decile will receive the rebate¹. Households exempt from Council Tax, principally student households, and tenants whose landlord pays the Council Tax, are also not helped; those who do not pay by direct debit must claim, and the OBR has assumed 20 per cent will not, saving the Government £0.2 billion¹. In London, one in five of the poorest households live in Band E to H properties and will not receive any automatic support¹.

Energy efficiency shapes the impact. The efficiency gap between a typical EPC E and EPC C-rated home is £320 a year, set to jump to £380 a year in October, affecting 4.2 million families in England alone¹. In October, more than half of households in EPC E rated homes, and four in five of those in EPC F rated homes, are expected to fall into fuel stress, compared with one in five for those in better-insulated properties¹. The heating bill of a typical over-60s couple could reach £1,315 this winter, more than double their 2021 bills and £180 higher than an equivalent working-age household¹.

Why it matters for households

The support announced in February reduces, but does not remove, the April increase for most households¹. The rebate reaches households through the Council Tax system, so entitlement depends on the property band and on how the bill is paid: those in Bands E to H, those exempt from Council Tax, and tenants whose landlord pays it are outside the automatic payments, and non-direct-debit payers must claim¹. Households in poorly insulated homes and in the North and Midlands face higher levels of fuel stress¹. The figures cover England; the analysis does not give equivalent numbers for Scotland, Wales or Northern Ireland.

What happens next

A further price cap change is expected in October 2022, with commodity prices suggesting a level around £2,500¹. The Resolution Foundation notes continued pressure means further support may be announced, and points to the expected British Energy Security Strategy¹. No further measures have been reported.