A quarter of people have not heard of Rishi Sunak’s flagship cost-of-living policy that will hand a £200 rebate to every household in a bid to tackle the energy bill crisis.
Amid soaring wholesale gas prices, Ofgem announced last week that the energy price cap will increase by 54% – meaning the average UK household’s annual energy bill will rise by £693 to £1,971 on 1 April.
Following the announcement, the chancellor announced that the government would be bringing in the £9.1bn “Energy Rebate Scheme” to help struggling households. The scheme is made up of two parts:
- Households in bands A-D will receive a £150 discount on their council tax
- Every household will receive a £200 interest-free repayable ‘rebate’ or ‘discount’ on their energy bills. All households will then repay the £200 as an extra £40 on their energy bills for five years from 2023.
The announcement has triggered widespread confusion, with experts questioning how the £200 payment can be regarded as a rebate when many households will effectively be paying it back. One government minister has even referred to it as a loan.
Consumer champion and Money Saving Expert founder Martin Lewis has said that the plan is effectively two separate levies. The first will see all bill payers given a £200 payment; the second will see bill payers pay an annual sum of £40 for five years – regardless of whether they got the initial payment.
Some 23% of Brits are unaware of the scheme altogether, with 18-34 year olds most likely to be in the dark. One in four are unaware that the discount on energy bills has to be paid back, with the figure rising to one in three for 18-34 year olds. In contrast, just 13% of over 55s were unaware of this.
The poll suggests that Sunak needs to work harder to make sure the public, especially younger people, are aware of the scheme and how it is going to affect their finances. Lewis has expressed concern about the government’s messaging on the issue, and has criticised the language used by the Treasury.
On Friday, he called for the scheme to be scrapped after YouGov polling suggested people did not want to be forced to pay back a £200 they had not asked for. FullFact told Yahoo News UK the £200 arrangement was confusing, and could not truly be referred to as a rebate as it is repayable. 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. When asked by Yahoo News UK how the scheme could be classified as a ‘rebate’, the Treasury repeated that the £200 was a rebate and a discount. However, it appears the public disagree.