Rishi Sunak’s £200 energy ‘discount’ branded ‘shoddily designed buy now, pay later loan scheme’

Labour has branded Rishi Sunak's energy bills "discount" a "shoddily designed buy now, pay later loan scheme" after research revealed poor levels of understanding of the policy among the British public.

Savanta ComRes polling for Yahoo News UK revealed one in four Brits do not realise the £200 rebate will have to be paid back, and another quarter haven't even heard of the policy.

On Thursday last week, Rishi Sunak announced the government's "Energy Bills Rebate" scheme to support households grappling with soaring energy bills and the growing cost-of-living crisis.

The announcement came after after Ofgem announced the energy price cap will increase by 54%, meaning the average UK household's annual energy bill will rise by £693 to £1,971 on 1 April.

As part of the plan, households in bands A to D will receive a £150 council tax rebate.

All households will receive a £200 "discount" or "rebate" on their energy bills this year.

Then, from 2023, all households will have to pay a £200 levy on their bills, made up of £40 instalments every year for five years.

Read more: Exclusive: One in four people have no idea about government’s £200 energy bill 'discount'

The move has been widely criticised, with consumer champion and money saving expert Martin Lewis describing the £200 payment as a "loan-not-a-loan" and more akin to a "levy" or a tax.

On the question of what constitutes to a rebate, the polling reveals two thirds believe a rebate is "a refund you can keep".

Responding to the poll, Pat McFadden, shadow chief secretary to the Treasury told Yahoo News UK: “This tells you all you need to know about this chancellor’s shoddily designed buy now, pay later loan scheme.

“In the midst of a cost of living crisis, the government’s proposals will leave families in Britain paying hundreds of pounds more – and now we discover many won’t even know about the loan the Chancellor is claiming will help them.

“The Conservatives want to load costs on taxpayers – while Labour will keep bills low with a windfall tax on north sea oil and gas producers with booming profits.

“Labour’s plan will cut £200 off most household bills immediately from April, with £600 to those households who need it most – cancelling out almost the entire rise in energy prices for low income households.”

At prime minister's questions on Wednesday, Labour leader Sir Keir Starmer referred to Sunak as the "loanshark chancellor" and described the £200 "rebate" as "scam".

“Talking of scams, households are going to have to fork out an extra £19 billion on their energy bills," said Starmer.

"The government is insulting people’s intelligence by pretending it’s giving them a discount, but it’s not, it’s a con. A buy now, pay later scheme, a dodgy loan, not a proper plan."

He added: “The reality is this, on top of the Tory tax rises, on top of the soaring prices, the loan shark Chancellor and his unwitting sidekick have now kicked up a buy-now, pay-later scheme."

The Treasury have denied claims that the £200 payment is actually a loan.

Read more: Martin Lewis tackles confusion over Rishi Sunak's £200 energy 'loan'

“We understand that people are concerned about pressures on household budgets which is why we have set out a generous package of support, with a non-repayable £150 council tax rebate from April and a further reduction of £200 on energy bills in October," a Treasury spokesperson said in response to the new polling.

“The energy bills reduction is not a loan to households or suppliers and will help people manage the increase in energy bills by spreading the increased costs over a few years, so they are more manageable.”

It comes as experts warn that 2022 could become "the year of the squeeze" households, with the director of the Institute for Fiscal Studies suggesting that this year could be worse than the 2008/09 financial crisis for millions of Brits amid the escalating cost-of-living crisis.

Watch: Rishi Sunak announces new measures to help with energy price rise