The government has unveiled a £15 billion giveaway to help Britons cope with the rising cost of living.
All households will see their energy bills cut by £400, with those on the lowest incomes receiving at least £1,200 in additional support.
The initiative will be paid for through a windfall tax on the “extraordinary” profits being made by oil and gas companies.
Chancellor Rishi Sunak said: “We are raising emergency funds to help millions of the most vulnerable families who are struggling right now.
“All households will benefit from universal support for energy bills of £400 – with not a penny to repay.”
What support is available?
The Chancellor is doubling the help available through the Energy Bills Support Scheme from £200 to £400.
He is also changing the support scheme from a loan that people would have to pay back, to a grant – meaning it does not have to be repaid.
Households will also benefit from the previously announced £150 council tax rebate for homes in England that sit within bands A to D.
As a result, they will be £550 better off overall than before the measures were announced.
What about help for the most vulnerable?
In addition to the Energy Bills Support Scheme, there is also extra help for the most vulnerable.
Around 8 million households on the lowest incomes will receive a one-off Cost of Living Payment of £650.
The money will be given in two payments, the first from July and the second in the autumn. It will be sent straight to the bank accounts of people on means-tested benefits without the need to claim it.
Pensioners are set to receive a one-off Pensioner Cost of Living Payment of £300.
The cash will help more than eight million households who receive the Winter Fuel Payment. They will receive the money in the autumn.
People with disabilities
An estimated 6 million people who receive means-tested disability benefits will be given a one-off Disability Cost of Living Payment of £150 in September.
Many of these people will also receive the £650 Cost of Living Payment for low-income households, bringing the total value of support to £800.
To help people who do not fall into the above categories, the government is also putting an extra £500 million into the Household Support Fund from October.
The fund enables local councils in England to help those most in need with payments towards the cost of food, energy and water bills.
Why is this happening?
Inflation - which measures the rate at which the cost of things increases – is currently running at a 40-year high of 9%.
A combination of supply chain disruption caused by the Covid-19 pandemic, staff shortages in some sectors, and the war in Ukraine have pushed up the price of goods.
Energy bills are one of the areas in which people have been hardest hit, with regulator Ofgem announcing a 54% increase in the energy price cap in April, and recently warning that it is set to rise again in October to stand at £2,800.
How will the support be paid for?
The giveaway will be financed through a new windfall tax on energy companies, known as the Energy Profits Levy, which is expected to raise £5 billion.
It will see the profits made by oil and gas companies taxed at a rate of 25%. Profits made by the sector have surged as a result of soaring energy prices as a result of the conflict in Ukraine.
The tax is temporary and will be phased out once oil and gas prices return to normal levels.
How will it affect the housing market?
The support, while welcome, only goes some way to offset the increase in energy bills people face.
The average household will have seen the cost of their gas and electricity bills increase by nearly £1,200 this year.
This hike comes at a time when higher interest rates are leading to more expensive mortgage repayments and the cost of food is also increasing.
The rising cost of living that households face is expected to slow activity in the housing market during the second half of the year.
But house prices are not expected to fall, as lenders have previously factored higher mortgage and other costs into their affordability criteria.
They are also working closely with borrowers who are struggling to make repayments, to find a solution that enables them to stay in their home.
We expect house price growth to slow down during the year, with property values ending 2022 around 3% higher than they started it.