Following regulator Ofgem’s announcement that it will be increasing the domestic energy tariff cap by 54% from 1 April, Welsh Government Social Justice Minister, Jane Hutt has said that a typical household’s dual fuel energy bill will rise to almost £2,000 a year.
The minister described this as “a very worrying time for people”.
In a written statement, Jane Hutt MS said that “Energy bills have been fuelling the cost-of-living crisis we are all currently experiencing” and that “there are few signs of this crisis easing.”
The energy price cap, which was raised in October, has helped to shield households from some of the worst of the cost increases in the domestic electricity and gas market over the winter months, which has seen a large number of suppliers fall into administration.
But it has not been enough to protect households, particularly low-income households, from ever-increasing energy costs. National Energy Action has calculated some 22,500 more households in Wales have been pushed into fuel poverty by the October increase.
Jane Hutt MS said: “This further rise in the price cap by OFGEM in April risks pushing tens of thousands more families into fuel poverty.
“The UK Government’s immediate solution appears to be to load even more costs onto consumers’ bills. Its energy bills rebate will provide a £200 discount to electricity bills only from October, which will then be automatically recovered from people’s bills in £40 instalments over the next five years.
“It has also announced a £150 council tax rebate for homes in bands A to D in England from April. Wales will receive a funding consequential as a result of this announcement. We are considering how to target this at those who need it most. A further announcement will be made in due course.
“We are doing everything we can to support people in Wales with the cost-of-living crisis and rising energy bills, including doubling the Winter Fuel Support Payment to £200 and making increasing investment in our Discretionary Assistance Fund to help people who need urgent and emergency support.
“It is time the UK Government acted to support households and to address the turmoil in the domestic energy markets.”
The Welsh Conservatives meanwhile are calling on the Labour-run Welsh Government to use the newly announced £175m from the UK Government to give families a council tax rebate and ease of cost of living crisis.
Following Ofgem’s confirmation today that the energy price cap will rise by £700 from April, the Chancellor, Rishi Sunak, has announced a three-part plan to help with household fuel bills immediately and protect people against half of this increase – worth £350 per household, in a total package of support worth £8.6 billion across the United Kingdom.
The plan includes a £200 ‘smoothing’ rebate on energy bills for all households across Britain, to be paid back over the next five years at £40 per year – starting from April 2023.
It also includes a non-repayable £150 cash rebate for homes in Council Tax bands A-D – equivalent to 80 per cent of all households, helping both lower and middle-income families.
There’s also £144 million of discretionary funding for local authorities to support households not eligible for the council tax rebate.
Points two and three of the plan are devolved and will see the Labour administration in Cardiff Bay receive an extra £175m in consequential funding.
Welsh Conservative Senedd leader, Andrew RT Davies MS, said: “As the British economy continues its recovery from the pandemic, we must confront the global inflationary pressures caused by the world economy coming swiftly back to life.
“Much of this inflation is being driven by the rising cost of energy due to increased demand worldwide – and that is feeding through into pressures on the cost of living at home.
“Soaring energy bills are a major worry for hardworking families across Wales and the UK and the Conservative Chancellor has once again stepped up to the plate to help people in a time of need.
“With Labour ministers in Cardiff Bay set to receive £175 million as a result of the Chancellor’s action plan, it’s vital they use this money immediately to fund tax rebates and create a discretionary fund for local authorities to use on households who do not meet the criteria.
Jane Hutt MS, the Welsh Government Social Justice Minister said that she and Lee Waters MS, the Welsh Government Minister for Climate Change, had written jointly to the Secretary of State for Business, Energy and Industrial Strategy, setting out a series of actions that they want the UK Government to take to support households with their energy bills.
These include removing the social policy costs imposed on household energy bills and move them to general taxation; Introducing a differentiated domestic energy tariff cap or social energy tariff targeted to better support lower income households; and provide further and increased support through the Warm Home Discount and other winter fuel payment schemes.
The letter also calls on the UK Government to expand the ability of suppliers to write off household energy debt and introduce a match-funding element to the scheme, with the costs met by the UK Government; and Increase Local Housing Allowance rates.
The minister also called for a windfall tax on North Sea oil and gas producers as a means of measures to helping people through this cost-of-living crisis.
Jane Hutt added: “The cost-of-energy crisis and the wider cost-of-living crisis extends beyond any action the Welsh Government can take alone. We have expressed our concern to the UK Government and will continue to do so.
“Urgent action is needed to relieve bill payers from these very high energy prices.”
Meanwhile, Citizens Advice Cymru say that support on energy bills is “strange, complicated and untargeted”.
Rebecca Woolley, Director of Citizens Advice Cymru said: “The package of measures announced by the UK Government will provide some relief for all households in April, but it doesn’t go far enough for people on low incomes.
“Energy rebates are a buy now pay later solution which only provide temporary relief later this year. And if the proposed reduction on Council Tax was introduced along similar lines in Wales, our analysis suggests that around 230,000 households on the lowest income may not benefit at all. The Welsh Government needs to intervene to make sure those who have been hit hardest by the pandemic, are not left even further behind.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, added: “This is a strange, complicated and untargeted package of measures. For people on low incomes who need it most there are far easier ways for the Westminster government to deliver support. If the [UK] government is serious about helping families facing the desperate choice between heating and eating it should use the benefits system.”
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