She spoke to MPs about the impact of the Iran war on the cost of living
Chancellor Rachel Reeves has spoken to MPs about cost of living support that will save households £300 a year. She provided an update to the Treasury Committee on the Government’s policies to help people with their rising bills.
The MP committee questioned the Chancellor about the ongoing conflict in Iran and what measures are underway “to support consumers and businesses with their energy bills”. Oil prices have risen sharply since the conflict erupted, triggering an immediate spike in heating oil costs.
Concerns have also emerged about the long-term implications of the conflict in raising the cost of living. In response, Ms Reeves said: “One of the reasons why it was not in our national interest to be involved in that conflict is the impact here in the UK. That is why we made the decision that we did.
“Of course, the Treasury is always planning for different eventualities.” She noted that the full impact of the Iran conflict remains to be seen.
The Chancellor said: “We saw the impact of higher oil and gas prices just a few years ago, after Russia’s illegal invasion of Ukraine. As a former Chancellor of the Exchequer, Jeremy Hunt, said in the Chamber on Monday [March 9], it is too soon to know the impact of this crisis and take a policy response.”
Energy bills cut ‘will go ahead’
Nevertheless, she highlighted one initiative that soon reduce expenses for families. Ms Reeves said: “I also just want to say that the energy price cap protects consumers.
“In April, the cut in energy bills will go ahead, despite what is happening in the Middle East at the moment. So on average, despite what is happening in the world, domestic energy bills will go down by £117 on 1 April, and that will last until the end of June.”
The price cap set by regulator Ofgem will drop 7 per cent from April 1, meaning the typical bill for a household paying by direct debit for gas and electricity will fall to £1,641 annually. This represents a saving of approximately £10 each month.
£300 discounts for households
Ms Reeves was also questioned by the committee regarding what targeted assistance she is considering to help those struggling with their bills. She responded: “Of course we are working on different ways to protect people, including more targeted support.
“In the spending review last year, we expanded the Warm Home Discount to an additional three million lower income families, so in addition to the £150 on average that we took off people’s bills, from April this year, an additional three million households will get £150 off on top of that, taking their total discount to £300.
“That was targeted at the people who struggle most with their energy bills – those on the lowest incomes, both families and pensioners.” The Warm Home Discount is applied by your electricity provider subtracting the amount from your bill.
Most people receiving certain benefits in England and Wales automatically receive the discount. This includes those on any of these means-tested benefits:
- Housing Benefit
- Income-related Employment and Support Allowance
- Income-based Jobseeker’s Allowance
- Income Support
- Pension Credit
- Universal Credit.
If you are on a low income and live in Scotland, you may need to apply for the discount. However, if you get the Guarantee Credit portion of Pension Credit, the discount will be applied automatically.
