Rishi Sunak 'bribing voters with their own money' amid energy price cap backlash

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Chancellor Rishi Sunak speaking at a press conference in Downing Street, London. Picture date: Thursday February 3, 2022.
Chancellor Rishi Sunak announced the support on Thursday. (PA)

The Chancellor has been accused of "bribing voters with their own money" after announcing a £200 rebate on bills after the energy price cap rose by more than 50%.

Energy bills are set to soar by 54% for 22 million households from the beginning of April, adding £693 to the annual bills of a typical household.

After Ofgem announced the increase in the energy cap Rishi Sunak revealed a support package to help offset the rise for many households.

Central to the announcement was a £200 rebate on energy bills this year, but households will have to repay the cash with bill hikes of £40 per year over the next five years from 2023.

The Chancellor also revealed a £150 reduction in council tax for millions in England, which will not have to be paid back, and £144 million to councils to support vulnerable households.

Watch: Chancellor claims energy price hikes 'so significant' it will affect middle-income households

Read more: Cost of living: Three key dates that will affect the cash in your pocket

The increased energy bills, even with the new support from the government, will push four million households into fuel poverty – double the current amount, according to the Resolution Foundation think-tank.

The energy price cap is expected to rise sharply again in October, just as the winter sets in.

The support has been criticised as not going far enough by many.

Senior Labour MP Chris Bryant said the £200 rebate was just "bribing voters with their own money" saying the Chancellor was being dishonest by lending people their own money and "pretending it’s a grant is dishonest."

Fuel poverty charity National Energy Action (NEA) said the Chancellors announcement was "woefully inadequate."

NEA warned that the government’s proposals would not “avert devastation to health, wealth and wellbeing for millions of the poorest households”.

Watch: Energy crisis: What is the price cap and why will bills rise so sharply?

Read more: Council tax rebate: How to find out if you're eligible for the £150

NEA chief executive Adam Scorer said: “These energy crisis measures are woefully inadequate and will leave those on the lowest incomes and in the least efficient homes in deep peril.

“We needed deep, targeted support for the most vulnerable. We have shallow, broad measures for all. That simply does not work.

“The depth of support is not proportionate to the increases. A household paying by prepayment will still have a £500 increase when you take into account rises from October 2021 and April 2022."

Age UK charity director Caroline Abrahams said older people on low and modest incomes would be “badly shaken” by the announcements.

She said: “With average energy bills now set to rise by a whopping £693 per year – and almost certain to increase further in a few months’ time – the support the Chancellor has announced simply does not go far enough. It will still leave many of these pensioners facing energy costs surging by an extra several hundred pounds that they cannot afford to pay."

An illustration of an online energy bill. Energy prices will rise by �693 a year for millions of households after regulator Ofgem hiked the price cap on bills to �1,971 or 54%. Picture date: Thursday February 3, 2022.
Energy bills are set to rise for many by more than 50%. (PA)

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Imran Hussain, director of policy and campaigns at Action for Children, said: “Soaring energy prices are the latest battle for low-income families already locked in a permanent cost of living crisis. We welcome the Government is taking action, but the proposals outlined today are poorly targeted.

“Just over 100 days ago, the families we help lost £1,000 a year in Universal Credit, and will now have nearly £700 a year added to their bills. The help announced for these families today won’t be enough. We’re going to see more children going hungry as parents struggle to make ends meet."

Justifying his policy, Sunak told the Commons: “For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.

A homeowner turns down the temperature of a central heating thermostat in Basingstoke, Hampshire. Ofgem is expected to announce that the energy price cap is to rise by 50 percent because of soaring wholesale gas prices, meaning the average bill could hit �1,915. Picture date: Thursday February 3, 2022.
The government's support has been labelled inadequate. (PA)

“But what we can do is take the sting out of a significant price shock for millions of families by making sure that the increase in prices is smaller initially and spread over a longer period.”

The squeeze comes as oil giant Shell revealed a 14-fold increase in profits as the company benefited from the spike in global prices.

Labour suggested a windfall tax on energy companies profiting from the current situation, but the Conservatives rejected this idea saying it would put off investment.

Meanwhile, inflation is set to hit an eye-watering 7.25% in April, according to new Bank of England forecasts released on Thursday.

The prediction would mean that disposable incomes fall by around 2%, according to Bank estimates, the worst impact since records began in 1990.

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