Energy Bills Support Scheme to provide £200 off energy bills

The Energy Bills Support Scheme will give all domestic electricity customers a £200 reduction on their energy bills from October 2022, according to the government's announcement of the measure¹. The scheme was set out alongside a £150 council tax rebate for households in England in bands A to D, part of a package of measures worth over £9.1 billion to support households with rising energy bills¹.

The £200 is not a grant. The government will initially meet the cost of the payments, but they must be paid back: the £200 is recovered automatically through energy bills in £40 instalments over five years, beginning in 2023². Which? renamed its coverage of the measure from an energy discount to a credit loan to make clear the money must be repaid². The Bevan Foundation, in a guest post by Mark Isherwood MS, describes the same recovery terms: equal £40 instalments over five years from 2023⁴.

The scheme sits alongside other support. The £150 council tax rebate for England's band A to D households is not means-tested and does not need to be repaid, with local authorities expected to credit accounts in April 2022². Scotland announced a £150 rebate for 73% of households, and Wales announced £150 rebates for households in bands A to D and those in the council tax reduction scheme². Northern Ireland will be funded with around £150 million through the Barnett formula, as energy policy is devolved². Local authorities in England received a £144 million discretionary fund for residents on low incomes, including those who do not pay council tax or live in bands E to H².

The Warm Home Discount is being extended until 2025/2026 and expanded to reduce the energy costs of around £3 million low-income and vulnerable households every year, while the Energy Company Obligation scheme will see £1 billion annual funding until 2026¹. Which? reported plans for a £10 uplift to £150 from October, with more detail on qualifying households to be published after a consultation².

Why it matters for households

Every domestic electricity customer receives the £200 credit from October 2022, applied by energy suppliers⁴. Because it is recovered rather than given, the effect on a household's bills is a temporary reduction followed by a period of higher bills: £40 a year for five years from 2023². The credit arrives in the same month as the energy price cap rise of £693 to £1,971 a year for a typical customer on default tariffs paying by direct debit, announced by Ofgem for England, Scotland and Wales from April 2022². National Energy Action Cymru estimated that over 280,000 households in Wales could be in fuel poverty from April 2022, 100,000 more than in October 2021⁴.

The £150 council tax rebate is separate and is not repaid². Eligibility differs by nation: England's rebate covers bands A to D; Scotland's covers households in the council tax reduction scheme in all bands plus bands A to D; Wales covers bands A to D and the reduction scheme². The Warm Home Discount is paid to those receiving the guarantee credit element of Pension Credit, or on a low income or certain means-tested benefits, with each supplier applying its own criteria². More detail on help with energy bills and on benefits generally is set out in the site's guides.

What happens next

The £200 credit is applied from October 2022¹. Recovery begins in 2023². The government said more detail on which households qualify for the expanded Warm Home Discount would be published after a consultation². The Welsh Government announced a further Winter Fuel Payment later in 2022, a £150 payment to households in bands A to D and those receiving council tax reduction support, and a £25 million discretionary fund for local authorities⁴.