Government £400 energy discount scheme ended in April 2023

The government's energy discount scheme, which paid £400 to every UK household, ended in April 2023. The payments began in October 2022 "to help with the soaring cost of energy"¹.

The discount closed against a background of price-capped variable tariffs. Since 1 July 2023, the energy price cap has been in place, limiting the price of a single unit of energy for customers on variable tariffs. It does not apply to those paying for a fixed tariff¹. Under the cap, energy bills for a typical household were around £173 per month, or £2,074 per year, with an average electricity unit rate of around 30p per kWh and an average gas unit rate of around 8p per kWh¹.

From 1 October 2023, that typical monthly figure was expected to drop slightly to around £160, with the electricity unit rate changing to around 28p per kWh and the gas unit rate to around 7p per kWh. Daily standing charges were staying the same or increasing slightly, so bills would change differently depending on where a household lives and how much energy it uses¹. The cap is set by Ofgem, changes every three months, and was expected to rise in January 2024¹.

Why it matters for households

The £400 was paid automatically to households and has now stopped, so anyone budgeting on the basis of that support has seen it fall away from April 2023¹. The wider cost of living payments system and the Warm Home Discount are separate from the £400 discount and are covered elsewhere.

For households on variable tariffs, the amount paid per unit of gas and electricity continues to be set by the price cap rather than by the discount. The cap does not apply to fixed tariffs¹. Standing charges, which are paid regardless of use, were staying the same or rising slightly even as unit rates fell¹.

Other household costs also feature in the same picture. The average two-year fixed mortgage rate was 6.66% and the average five-year fix 6.15%¹. In June 2023, the majority of mortgage lenders signed a new mortgage charter confirming support options for those unable to keep up with their payments; under it, anyone who misses payments will not have their home repossessed without consent, unless in exceptional circumstances, for at least 12 months¹.

What happens next

The price cap was expected to rise in January 2024, according to the same report¹. No further £400 discount payments have been reported.