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Uncertainty for Welsh households as Rishi Sunak announces £350 energy rebate in England but it’ll work differently here

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Millions of people in England will get £350 towards their energy bills, it has been announced, but there could be differences to its rollout in Wales.

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Energy regulator Ofgem today announced an increase that energy companies are going to be allowed to raise the cost of electricity by up to £700 a month for the average household from April 1 as a result of the soaring global wholesale price of gas, which has quadrupled in the past year.

In response, Chancellor Rishi Sunak has announced that there will be a £200 rebate on energy bills for all households and that people living in properties in Band A to Band D for council tax will get an additional £150 council tax rebate.

But as some of this involves areas that are devolved to the Welsh Government, it will work differently here and we’re waiting for clarification from the Welsh Government on what it will do.

Announcing the plans, Mr Sunak said “I know the number one issue on people’s minds is the rising cost of living.

“That’s why the Government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.”

What is on offer?

There are two parts of this funding.

The Energy Bills Rebate will be an upfront £200 discount on bills. It will be applied by energy supplies from October with the Government meeting the costs.

This discount will then be automatically recovered from people’s bills in equal £40 instalments over the next five years. This will begin from 2023, when global wholesale gas prices are expected to come down.

The second will be via council tax, but because that is devolved in Wales, we are awaiting for more details about how it will apply here.

In England, if you’re in council tax bands A-D you will also receive a £150 rebate. That will be made by councils and will not be repaid.

Mr Sunak said this one-off payment will benefit around 80% of all homes in England.

In England, on top of this discount, discretionary funding of £144 million will also be provided to support vulnerable people and individuals on low incomes that do not pay council tax, or that pay council tax for properties in Bands E-H.

Eligibility for the Warm Home Discount will be expanded for almost a third more people there is also a £10 uplift to £150 from October.

What is on offer in Wales?

The UK Government says devolved governments in Scotland, Wales and Northern Ireland will get a total of £565 million of Barnett funding as a result of the Council Tax Energy Rebate in England. Wales will get £175m. The devolved administrations will be able to choose whether to spend this funding this year or next year.

While for energy bills, Northern Ireland will be funded to provide comparable support with around £150 million through the Barnett formula next year.

Welsh Government has criticised the £200 discount saying “the UK Government’s immediate solution appears to be to load even more costs onto consumers’ bills.”

However, as to the £150 rebate which it will be up to them to decide how to spend, it says “We are considering how to target this at those who need it most. A further announcement will be made in due course.”

Earlier this week Welsh Government announced plans for the most vulnerable to get £200 towards energy bills.

What was the reaction?

Asked by Alun Cairns MP to tell Welsh Government to “encourage” or “take it a step further and insist it is passed on”, the chancellor said: “I can confirm that Welsh administration will receive £175m in Barnett consequentials which will enable them to provide a similar discount and the chief secretary will be speaking to the Welsh Government later today and will very much make the point to say we would very much like to see that to the benefit to all his constituents and those all across Wales.”

Rhondda Labour MP Chris Bryant told Mr Sunak that “This is pretty puny stuff. £350 isn’t going to touch the sides of the problem for my constituents in the Rhondda, gas and electricity up for the average family by £686, fuel up by £314, the average weekly shop by £85, Universal Credit cut by £1,040, National Insurance up by £150 and frozen tax allowances by him will cost another £300, that’s £2,875 in a constituency where the average wage is is £27,000. That is really going to cause hardship, £350 doesn’t even touch it.”

Pontypridd MP Alex Davies-Jones described it as “too little too late”.

Plaid Cymru MP Ben Lake said 20% of homes in Wales aren’t connected to the main gas grid and in his Ceredigion constituency it rises to over 80%. He asked whether the rebate will also apply to homes not connected to the main power grid.

“What I can tell him is the rebate will be delivered through electricity bills to solve that exact problem which is much more universal and the council tax discount in England is through council tax system so it’s agnostic to the heating source and I would expect Welsh Government if they choose to do the same thing will also be able to solve that problem in that way”.

Climate change minister Julie James said: “Today, the energy regulator OFGEM, has confirmed it will be increasing the domestic energy tariff cap by 54% from 1 April. This will have the effect of increasing a typical household’s dual fuel energy bill to almost £2,000 a year. This is a very worrying time for people. Energy bills have been fuelling the cost-of-living crisis we are all currently experiencing. There are few signs of this crisis easing.”

She said UK Government needed to “support households and to address the turmoil in the domestic energy markets”.

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