It is now very clear that the cost of living is going up! It’s now at 6% and rising. Energy bills are set to double as the cap set limiting the amount energy companies can charge has been lifted effective from April increasing the average household energy bill by almost £700. The government has rightly recognised something must be done. First a rebate on energy bills of £200 to be repaid by the consumer over five years in £40 chunks administered by the energy companies. Second a rebate on council tax of £150 for those living in properties in bands A-D, and finally a discretionary fund for local authorities to help those not eligible for the council tax relief. This package should be worth some £350 per household. That should halve the pain – and is very welcome!
Some of the reasons for the increase in living costs are changes in global supply and demand – for energy, food, raw materials and more – much of which is a consequence of measures taken by governments during Covid around the world to limit infection, and some of which is down to international relations. Some are a result of domestic policy.
Our immediate priority should be to find a way of helping people manage with lower incomes in real terms to meet rising costs of essentials. Now is not the time to indulge in the blame game. And whatever we do needs to be fair recognising that everyone is being affected. We already have a number of schemes in place to help the very poorest in society, but it often isn’t enough. Likewise, in rural areas like ours we have a disproportionate number of retirees, many of whom are existing on fixed incomes, and for many that is just the state pension.
I have been asking the Government for some time now to come up with a plan to address the very real pain - and fear people face, worrying about rent, increased mortgage payments alongside the energy and food bills. I’m glad something has been done. Clearly, we are all going to have to tighten our belts and take responsibility for getting though this – but government needs to help us do this with adjustments to the tax and benefit system. Following the “big spend” to get us through Covid, government needs to tighten its belt too and limit extra borrowing which will in time have to be paid back – and as interest rates rise at a higher rate than we have enjoyed over the last few years.
Lending money to the energy companies with an obligation to repay is not creating more debt. But at what cost – and will it work? If energy prices continue to rise – then no it won’t. What will happen then? I’m also curious as to what is being given to the energy companies to reimburse them for the administration costs of the scheme.
The second measure is a council tax rebate which will be a loss to local councils – how that will be reimbursed and on what terms is as yet unclear. There is also the hidden cost of councils administering all this.
The Government believes this package of help gets to us all quicker than any other alternative and provides more generous help. I really hope this is right, but I can’t help feeling direct intervention through tax cuts and moving environmental reliefs to general taxation without the middleman, might not have been easier and cheaper.
There will be winners and there will be losers. A one size approach won’t fit all. And in rural areas like ours, there will be some pensioners in large band E properties on fixed incomes who will need help navigating the discretionary system and families living in oil fired homes with small electricity bills who will need to be helped to get the £200 discount applied. Nothing is impossible, but some of these wrinkles might need time to iron out.
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