‘Sunak’s £112m scam’: A million Brits will be forced to pay back 'energy loan’ they won't even get

Chancellor of the Exchequer Rishi Sunak, during a media briefing in Downing Street, London, on the long-awaited plan to fix the broken social care system. Picture date: Tuesday September 7, 2021.
Brits who don't receive the chancellor's £200 repayable 'discount' will be still be charged £40 over five years to foot the bill. (PA) (PA)

At least a million households that won’t receive the government’s £200 energy "loan" will still be liable to pay it back, according to new analysis from Labour.

Under Rishi Sunak's Energy Rebate Scheme, households will get a non-optional £200 discount this year to help with the soaring cost of energy bills.

This amount will then be paid back in £40 annual instalments for five years.

The policy has been widely criticised for being repayable, risking pushing the most vulnerable families further into debt - with the End Fuel Poverty Coalition referring to it as a "heat now, pay later" scheme.

On Friday, Labour branded the arrangement a "scam" after their analysis found more than a million Brits will be forced to pay £40 a year for the next five years – totalling £112m in revenue for the Treasury – without ever receiving the £200 discount.

Read more: Bleak Friday: Household bills to soar by £80 a month from 1 April

“This is a buy now, pay later chancellor, who is forcing this compulsory loan on people that people have to pay back then for years to come,” shadow chancellor Rachel Reeves told Yahoo News UK.

“The scam in it all is that, even if you don’t get the loan, you’re still having to pay it back."

Labour warn many first time buyers, victims of domestic abuse fleeing households, couples that are newly separated or divorced, returning veterans from Afghanistan, student households, and care leavers could be amongst those charged without receiving the initial payment.

British Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak react at a statement on the economic update session, at the House of Commons in London, Britain March 23, 2022. UK Parliament/Jessica Taylor/Handout via REUTERS  ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT. IMAGE MUST NOT BE ALTERED.
The government's energy bill scheme has been described as a "scam" by Labour. (Reuters) (Handout . / reuters)

"There’s a million people who are not going to get the £200 because, you know, they might be living at home today, they may be a student," said Reeves.

“They may be in a relationship now that breaks down - they will never get the £200, but they still have to pay the money back.

"A million people in that situation. This policy is a scam.”

Energy bills for millions of Brits are set to soar from Friday as Ofgem’s new price cap comes into force - with the average annual bill rising by £693, a 54% increase.

Read more: Why working people lose out from Rishi Sunak’s spring statement: ‘It’s indefensible’

In February, the chancellor announced a package of measures worth around £9bn to help with energy costs - including a £150 non-repayable council tax rebate to help with bills for houses in bands A-D.

However, the Treasury will claw back £5bn of the total spent due to the £200 discount being repayable.

It comes amid a spiralling cost of living crisis, with inflation in the UK rising to levels not seen for decades.

Inflation has hit levels not seen in the UK for decades (Yahoo News UK/Flourish/ONS)
Inflation has hit levels not seen in the UK for decades (Yahoo News UK/Flourish/ONS)

“The first part of the rebate spreads the extra costs of this year’s energy price shock," said Sunak last month.

“In October, all domestic electricity customers will receive a £200 discount on their bills. People will then have five years to repay that discount in equal instalments of £40 a year."

Labour have said they have a package to cut most households' bills by £200, including: cutting VAT on home energy bills, plus increasing and extending the Warm Homes Discount scheme to a third of all households - reducing their bills by £600.

The party say they would pay for that by implementing a windfall tax on oil giants profiting from the energy crisis.

Read more: Rishi Sunak confronted by worried mum on live radio - 'This doesn't cut it'

However, the government have rejected such a move claiming it could deter oil companies investing in green energy in the UK in the future.

Responding to Labour's analysis of the £200 payment, National Energy Action (NEA) echoed the warning that households will be forced to pay it back without ever receiving it.

“In addition to the increased number of households, NEA believes that a significant number of prepayment households could miss out on the rebate, while still having to pay for it in future years," said Matt Copeland, head of policy and public affairs at the organisation.

British Chancellor of the Exchequer Rishi Sunak leaves Downing Street on the day of the Spring Statement, in London, Britain, March 23, 2022. REUTERS/Peter Cziborra
Labour has said more than one million Brits that won't receive the government’s £200 energy 'loan' will be liable for paying it back. (Reuters) (Peter Cziborra / reuters)

"We estimate that between 200,000 and 250,000 households with legacy prepayment meters could struggle to access the £200.”

A Treasury spokesperson said: "The OBR's figures show that the government will not receive any additional money back from the rebate than is paid out. We will shortly be consulting on the detailed operation of the rebate.

"The government's energy package will mean that millions of households benefit from £350 help towards their energy bills this year, helping to soothe cost of living pressures."

Labour's analysis comes amid stark warnings that the cost-of-living crisis is only set to get worse.

Last week the Office for Budget Responsibility warned Brits are facing the worst drop in living standards in half a century.

Watch: Labour: Government's pathetic cost-of-living response