£400 in energy bill discounts offered to households in instalments - here's when you can expect the first payment

All households in England, Scotland and Wales will receive £400 in energy bill discounts the Government has announced.

The payments will look to alleviate some of pressure faced by households amid the cost of living crisis.

The support, which also came alongside more targeted efforts for the worst off households, came in response to predictions that energy bills would rise to £2,800 for the average household in October.

But consultancy BFY believes bills could hit £3,420 per year from October, before rising further in January.

All households in England, Scotland and Wales will receive £400 in energy bill discounts from October, the Government has announced.

Details have now emerged of how the £400 support that then Chancellor announced in May to help people through the cost of living crisis will be paid out.

Business and Energy Secretary Kwasi Kwarteng said: “People across the country are understandably worried about the global rise in energy costs, and the pressure this is placing on everyday bills.

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“While no government can control global gas prices, we have a responsibility to step in where we can and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months.”

Payment date, direct debit customers and automatic deductions for energy payment

The support will be issued in six instalments over six months to some 29 million households – and will apply directly to households in England, Scotland and Wales.

Households will see a discount of £66 applied to their energy bills in October and November, and £67 a month from December to March 2023.

The energy price cap will rise to £3,500 or more in October.

Those with a domestic electricity meter point paying for their energy via standard credit, payment card and direct debit will receive an automatic deduction to their bills.

Traditional prepayment meter customers will be provided with Energy Bill discount vouchers in the first week of each month, issued via SMS text, email or post.

The Treasury is in still in discussion with Stormont ministers about how to make the payment to Northern Ireland households.

Why have energy bill discounts been introduced?

As global energy prices have soared, fuelled by increased demand as Covid-19 lockdowns receded and with supplies constrained by the war in Ukraine, companies in the industry have seen their profits boosted.

The new payment is part of measures to support struggling households with the rising cost of living.

Chancellor Nadhim Zahawi said the discount was “part of our £37 billion of help for households, including 8 million of the most vulnerable households receiving £1,200 of direct support to help with the cost of living”.

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The announcement comes after Consumer champion Martin Lewis said the Prime Minister and Tory leadership contenders Liz Truss and Rishi Sunak needed to agree a package to help consumers.

He said Boris Johnson’s “zombie government” was failing to address the crisis caused by rising energy bills and warned decisions on support cannot be delayed until Mr Johnson’s successor is in office.

Reaction to energy payment scheme

Charities have expressed concern that for the more than two million households with traditional non-smart prepayment devices - often the most vulnerable and poor in society - this energy help will be harder to access.

Maureen Fildes from National Energy Action (NEA), the national fuel poverty charity, said the organisation is hearing a lot of concerns from people on prepayment meters and credit meters.

“There is a lot of fear about how people are going to survive the winter,” she told BBC Radio 4’s Today programme.

Ms Fildes said prepayment customers will receive monthly vouchers as part of the £400 discount, but she said this can cause problems.

She urged people to ensure that their contact details with their supplier are up to date and not to ignore any post that comes through from their supplier.

Asked if she thinks the Government measures will be enough to help people given the kind of rises that are predicted, she said: “I don’t think that is going to be sufficient to help people cope with the cost of living this winter.”

‘Worst is yet to come'

Caroline Flint, chairwoman of the Committee on Fuel Poverty, said around 3.16 million households are living in fuel poverty according to official statistics.

“But those statistics were before these price increases happened and there are a number of organisations – National Energy Action and others – who are predicting it could double that or even more,” the former Labour MP told BBC Radio 4’s Today programme.

Ms Flint said the Government should have a fuel poverty winter plan which is actively monitoring the situation on the ground, and consider whether more cash support is needed.

She added: “I think every step possible has to be made to prevent people turning off their heating. It is very rare these days that people would be cut off, if at all, by energy suppliers.

“One of the worries of our committee is that those people with anxiety about their bills, those people who are not going to be able to afford it despite the support they are getting, will actively just not turn on their heating.”

Derek Lickorish, chairman of energy company Utilita, said he believes the worst is “potentially yet to come” with regard to energy costs, and that it is time for a “social tariff”.

He told BBC Radio 4’s Today programme: “I believe that we now need to look at the poorest and most vulnerable in society that are most adversely affected.

“We need to set a tariff that is affordable for these consumers, not paid for by all other customers but funded by the Treasury.”

Mr Lickorish said that £50 of energy in 2020 would have lasted 12 days, while with a price cap of £3,400 to £3,500 it will only last three-and-a-half days.

“As we move on it’s going to get less and less, so we have to do something really quite significant because we haven’t seen the worst of this yet, in my opinion,” he said.

“And I think the weaponising of gas is going to be the problem.”