John Healey is offering 20 million households in council tax bands A to D a £100 payment this winter to help with energy bills. The money is intended to be paid directly into bank accounts, giving eligible households some extra cash as temperatures fall. But with bills rising, the payment may provide a cushion rather than a lasting solution.
A payment against a rising bill
The latest Ofgem price cap is £1,723 a year for a typical household paying by direct debit, up 4% on the previous quarter. That figure is an annual estimate based on typical use, not a limit on what an individual household can pay. Households that use more energy will pay more.
A further increase is expected in January. A recent House of Commons Library forecast put the likely rise in the price cap at 9% for the first quarter of 2027, although Ofgem has not yet set the final figure. Against that forecast, a £100 payment would cover around two thirds of the increase in the typical annualised bill. The actual impact will depend on the final price cap and how much energy a household uses.
Who gets the money, and who could miss out?
The payment is targeted at households in council tax bands A to D. Those in bands E to H are outside the stated eligibility group, even if their energy costs are high. The payment is not means tested and is not linked to how much energy a household uses.
That means two eligible households could receive the same amount despite having very different bills. A smaller household that uses relatively little energy could get the same payment as a larger household with higher consumption. Meanwhile, households in higher council tax bands may face steep bills but not qualify.
The scheme is for England. Healey has called on the devolved governments to introduce equivalent support, so households in Scotland, Wales and Northern Ireland will need to wait for decisions from their administrations.
Other measures could bring further relief
The Government has extended the removal of VAT from electricity bills until July. It estimates the cut will take around £50 off the annual price cap. The saving will vary with electricity use, so it will not be the same for every household.
Gas standing charges are also due to be removed in 2027. The fixed charge will instead be reflected in the unit price of gas. The Treasury estimates that around 60% of account holding households could save an average of £45 a year. This is a projected bill saving, not another cash payment. Households that use more gas could see less benefit or pay more.
Breathing space, not a fix
The £100 payment could help eligible households meet bills during the coldest months. Alongside the electricity VAT cut, it offers short term relief. But the payment is one off, and forecasts point to further pressure on energy costs.
The test will be whether the money reaches households before bills peak and whether the final price cap is close to current forecasts. For people outside bands A to D, or those with particularly high energy use, the Budget offers less immediate help.
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