Chancellor Rachel Reeves speaking to the Treasury Committee (Image: UK Parliament)
Chancellor Rachel Reeves has spoken to MPs about a scheme that will save families over £100 in bills. She gave an update to the Treasury Committee about the Government’s policies, including upcoming changes to tax on the state pension.
The MP committee asked the Chancellor about the ongoing war in Iran and what plans are underway “to support consumers and businesses with their energy bills”. The price of oil has sharply increased since the conflict broke out, causing an immediate jump in the price of heating oil.
There have also been concerns about the long-term impact of increasing the cost of living as the offensive continues. In response, Ms Reeves said: “One of the reasons why it was not in our national interest to be involved in that conflict is the impact here in the UK. That is why we made the decision that we did.
“Of course, the Treasury is always planning for different eventualities.” She said the impact of the Iran conflict has yet to be fully seen.
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The Chancellor said: “We saw the impact of higher oil and gas prices just a few years ago, after Russia‘s illegal invasion of Ukraine. As a former Chancellor of the Exchequer, Jeremy Hunt, said in the Chamber on Monday [March 9], it is too soon to know the impact of this crisis and take a policy response.”
Energy bills savings scheme ‘will go ahead’
However, she did point to one looming change that will bring down costs for households. Ms Reeves said: “I also just want to say that the energy price cap protects consumers. In April, the cut in energy bills will go ahead, despite what is happening in the Middle East at the moment.
“So on average, despite what is happening in the world, domestic energy bills will go down by £117 on 1 April, and that will last until the end of June.” The price cap set by regulator Ofgem will fall 7 percent from April 1, meaning the average bill for a household paying by direct debit for gas and electricity will drop to £1,641 a year.
This equates to a saving of around £10 a month. In light of the Iran conflict, the Government has also announced a package of support for households impacted by the spike in the cost of heating oil.
£300 discounts for households
Ms Reeves was also asked by the committee about what targeted support she is looking at to help people struggling to pay their bills. She said: “Of course we are working on different ways to protect people, including more targeted support.
“In the spending review last year, we expanded the Warm Home Discount to an additional three million lower income families, so in addition to the £150 on average that we took off people’s bills, from April this year, an additional three million households will get £150 off on top of that, taking their total discount to £300.
“That was targeted at the people who struggle most with their energy bills – those on the lowest incomes, both families and pensioners.” The Warm Home Discount is applied by your electricity supplier deducting the amount from your bill.
Most people on certain benefits in England and Wales get the discount automatically. This includes those receiving any of these means-tested benefits:
- Housing Benefit
- Income-related Employment and Support Allowance
- Income-based Jobseeker’s Allowance
- Income Support
- Pension Credit
- Universal Credit.
You may need to apply for the discount if you are on a low income and live in Scotland, unless you are getting the Guarantee Credit portion of Pension Credit, in which case you will get the discount automatically.