'It's a loan, not a discount!' Tory MP heckled as he explains £200 energy scheme

A government minister has been heckled by a Question Time audience after he claimed Rishi Sunak's £200 repayable 'discount' on energy bills in October is not a loan.

In February, the chancellor announced his 'Energy Bills Rebate' scheme in response to news the energy price cap would rise by £693 for the average household on 1 April - a 54% increase.

The scheme is made up of two parts:

• Households in bands A-D will receive a £150 discount on their council tax; and

• Every household will receive a £200 interest-free repayable discount on their energy bills. Regardless of whether they received the £200, all households will then pay £40 instalments over five years via their bills.

The scheme has been criticised by experts for being partially repayable - leading to accusations it is a loan, is pushing vulnerable households into more debt, and forces a million households that do not receive the money to pay it back.

Greg Hands, minister of state for energy, clean growth and climate change, was heckled on Thursday night as he told the BBC's Question Time the £200 was not a loan.

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"The £200 is, of course, a loan," host Fiona Bruce told Hands.

Hands rejected that and said it was a "discount", to which she replied: "You're not being given it, you have to pay it back?"

In response, Hands said: "No [it's not on the individual] it gets taken back, at the point at which it is levy" before he was interrupted by shouts from the audience.

"What are you all shouting?" Bruce asked the audience. "[They're shouting]: 'It's a loan!'" she told Hands.

The minister continued to insist the £200 discount in October, which the public will have no choice but to pay for, was not a loan.

"It's taken back through a levy, it's not a loan - because it doesn't create an obligation on the individual to repay," said Hands.

"It is actually a levy on the price point... it is put on the price point, not on the individual. The individual does not have an obligation to repay."

Bruce replied: "So - we can say: 'We don't want to pay it back, we don't have to?'" to which Hands said no.

Torsten Bell, director at low-and-middle income think tank and the Resolution Foundation, told MPs in March that the scheme looked like a loan.

"In the real world, it is a loan to us as a collective, which we then pay back as a collective," said Bell.

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Paul Johnson, director at the Institute for Fiscal Studies, said: "You can decide how to describe it, but whatever the word is, we know exactly how it is going to work.

"It looks quite like a loan, but not completely."

FullFact told Yahoo News UK in February the £200 arrangement was confusing and could not truly be referred to as a 'rebate' - a term the government has used.

"A rebate usually refers to money returned to a consumer or taxpayer after they have paid for a product or paid tax," a spokesperson said.

"In this sense, the energy bill scheme is not a rebate because people will still have to pay their full energy bill, just over a longer time period. It is more akin to a payment plan than a rebate."

The Treasury has repeatedly insisted the £200 is not a loan.

“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," a spokesperson said in February.

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