HomeBusinessHow will Rishi Sunak's support deal on energy bills help pensioners?

How will Rishi Sunak’s support deal on energy bills help pensioners?

We are both pensioners, 74 and 70. We receive the following income: basic state pension each; council tax benefit; my personal pension.

Our combined income of approximately £1,400 per month puts us just over the threshold, which has not significantly changed for years, on pension credit – by just a few pounds. So, we do not qualify for grants or allowances.

How will the Chancellor’s announcement of help on energy bills be of use to us?


Costs going up: How will the Chancellor’s support deal on energy bills help pensioners paying reduced council tax?

Steve Webb replies: There were three main elements to the Chancellor’s recent announcement regarding help with energy bills, and it might be helpful if I described each one and how it would apply to someone in your situation.

For the purposes of this answer I will assume that you live in England, as it is not yet clear how some of these proposals will work for those living in Scotland and Wales.

The first measure is a £200 reduction in energy bills from October 2022.

You do not have to apply for this, and it will be applied to all households regardless of income.

The catch, of course, is that from 2023/24 your bill will be increased by £40 a year for five years so that you end up paying back the discount which you will receive this year.

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

The second measure is what has been described by the Government as a council tax ‘rebate’ of £150.

This is for one year only, and only for those in properties in council tax bands A to D.

The intention is that the benefit of this rebate will be felt as soon as April in most cases.

Where bill payers are paying by direct debit, councils will be able to reduce the amount which they deduct so that you end up paying £150 less in total in 2022/23.

However, what was not clear from the initial announcement is what will happen to those – such as yourselves – who are already getting help with their council tax and pay reduced bills.

In particular, for those who qualify for 100 per cent rebates on their council tax already, it was very hard to see how they could benefit from a further ‘rebate’ on a bill that they don’t actually pay.

It turns out that the Government will expect local authorities to find a way to get this money to pensioners and others who may be on council tax benefit.

If the council has bank details it should be able to deliver the help by a credit to your bank account.

But if they do not then they are likely to have to set up a process of writing to pensioners to encourage them to apply for the help.

Local authorities often get little or no notice of new announcements like this made by central Government.

Instead, at very short notice, they will have to set up systems to make sure that their local residents get the help which the Government intends.

Just a few days after the announcements, many councils will not yet have decided exactly how they are going to do this.

But if you have not heard from your local authority by mid March you may wish to contact them to find out how you will get your £150 boost.

Although you didn’t supply figures, you suggested that you may not be getting 100 per cent council tax benefit (as you are not on pension credit) but may be getting a relatively large rebate.

In this case it is possible your net payments each year are less than £150.

If so, your council will have to decide whether to help you by scrapping all your council tax payments and then topping this up to £150, or (more simply) to pay you the full £150 whilst continuing to take the normal payments towards council tax that you were expecting to pay.

Either way, it is going to be messy.

Finally, the Government has announced that it will allocate £144m to local authorities for hardship funds.

The main groups this funding is aimed at is:

– People in council tax Band E or higher, who are excluded from the £150 rebate scheme;

– People in properties which are ‘exempt’ from council tax, who cannot benefit from a council tax rebate;

– Other vulnerable people.

It will be up to local authorities how to allocate this money and again, at this stage, I very much doubt that they will have a plan in place.

But if you find yourself struggling because of high fuel bills you could certainly inquire of your local authority once they have set up their scheme to see if you would be eligible for additional help.

Finally, some energy companies may have their own special schemes to help those on low incomes.

Although these are often concentrated on those in receipt of specific benefits, they may have broader low income schemes which may be relevant to you.

There would be no harm checking with your energy provider to see if they have such a scheme.

These schemes can help both with regular bills but also with the costs of energy efficiency measures which could be another way of cutting your overall bills.

Ask Steve Webb a pension question

Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.

He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.

Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.

If you would like to ask Steve a question about pensions, please email him at [email protected].

Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.

If Steve is unable to answer your question, you can also contact MoneyHelper, a Government-backed organisation which gives free assistance on pensions to the public. It can be found here and its number is 0800 011 3797.

Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.  


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