Sunak’s £21bn rescue package is ‘no magic bullet’ – ‘you won’t get the cash until October’ | Personal Finance | Finance


Sunak’s package on Thursday enjoyed a much warmer reception than his last effort in March, but it may not be enough. The nation may need a repeat performance in the autumn, when the energy price cap will jump to at least £2,800.

The war in Ukraine is driving up energy prices, which are unlikely to drop as the conflict looks set to drag on. “We are by no means out of the woods”, said Gareth Kloet, energy expert at comparison site GoCompare Energy.

“Sunak’s deal will offer some respite but it’s not a magic bullet. He will come under pressure to introduce further support in the autumn.”

Kloet said households simply cannot find any competitive gas and electricity energy deals on the market at the moment. “Switching to a fixed deal could backfire, as you may end up paying more than the energy cap.”

Sunak’s move to double his previously announced £200 discount on energy bills to £400 will help, especially since the money will not have to be paid back.

Yet many will struggle to pay their gas and electricity bills over the summer as this payment will not arrive until October.

Every pensioner household will also get an extra £300 on top of the annual Winter Fuel Payment. But this will not be paid until November or December.

This comes on top of the £150 council tax rebate for band A-D properties, which Sunak previously announced. It means that every pensioner will be given £850 of support.

On top of this, around 8.3 million households receiving Universal Credit and other income-related benefits, will get a £650 payment.

This will arrive sooner, as it will be paid in two instalments, arriving in July and the autumn.

These benefits include means-tested state pension top-up pension credit, paid to low income retirees. This tops up their weekly income to a minimum of £182.60 if single, or £278.70 if in a couple.

Around 850,000 of the poorest pensioners fail to claim pension credit. They have an even better incentive to do so now.

READ MORE: DWP benefit could pay £4,800 on TOP of your State Pension – and it isn

Around six million receiving non-means-tested disability benefits will also receive a one-off £150 cost-of living payment.

This will apply to pensioners who receive Attendance Allowance, as well as younger disabled people on the Personal Independence Payment or Disability Living Allowance.

People falling into more than one category will qualify for multiple payments under the system.

This means the poorest pensioner households could get an extra £1,650 in total, said Laura Suter, head of personal finance at AJ Bell.

But she warned: “That may feel like a giant sum, but between March and October this year average energy bills will rise by £1,523.

“So even households getting the largest handouts have just £100 extra to cover all the other cost of living increases.”

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Suter said every UK household will get at least £550 from Sunak, including the highest earners. “The Chancellor will surely face criticism when this money could have been redirected at struggling low and middle earners.”

The UK’s state pension benefit system is incredibly complex, but most of Sunak’s extra support will be paid automatically, said Richard Lane, director of external affairs at the StepChange Debt Charity. “We welcome the efficiency with which it will be delivered.”

Households must still ensure they claim every state benefit they can, said Scott Mowbray, founder of money management app Snoop. “An astonishing £15 billion goes unclaimed in benefits each year. So if you’re on a low income use the handy Turn2Us benefits calculator to see what you might be due.”

The Chancellor has risen to the challenge of this year’s cost of living crisis. He will soon be under pressure for a repeat performance.

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