The UK government has announced a £100 one-off payment to more than 20 million households to help with rising energy bills this winter, alongside measures including an extension of the electricity VAT cut and plans to remove gas standing charges. The support package, announced in Chancellor John Healey’s first budget, aims to alleviate some of the financial pressure caused by soaring energy costs, which have been exacerbated by international tensions involving Iran.

The £100 payment is targeted at households in council tax bands A to D, representing about 80% of properties in England, with payouts expected to reach bank accounts in January. Additionally, the extension of the electricity VAT cut until July 2027 is projected to save households around £50 over the coming months. Healey also outlined plans to eliminate the fixed daily standing charge on gas bills, currently averaging £108 per year, by incorporating these fixed costs into the per-unit gas price. The government anticipates that around 60% of households will benefit from this change with annual savings of approximately £45, although some higher-usage customers could see increases between £25 and £70.

Despite these measures, critics warn the interventions may be insufficient in light of sharply rising bills. Average energy costs are predicted to increase from £1,723 to £2,192 in January and then to £2,389 in April, representing a rise of nearly £470 according to forecasts from providers EDF and E.On Next. Energy campaigners and analysts argue that the one-off payment will cover only a fraction of the anticipated increase, with some describing the support as inadequate to meaningfully offset the financial strain on households.

Concerns have also been raised about the targeting strategy based on outdated 1991 council tax band valuations. This approach could lead to uneven regional coverage, with some areas such as Hull and Liverpool seeing nearly all households eligible for the payment, while in parts of London and the southeast, fewer than half of households qualify. The government’s online tool to check individual council tax band eligibility experienced technical difficulties shortly after the announcement, limiting access for some users.

Supporters of the budget highlight the significance of the measures in helping to ease the cost of living pressures. Greater Manchester Mayor Andy Burnham described the budget as containing “significant measures” to provide breathing space for households facing rising expenses. Meanwhile, financial expert Martin Lewis noted that shifting standing charges onto unit prices might result in lower bills for the majority, although vulnerable groups with higher energy use could face increased costs.

The government emphasized that while it cannot fully shield households from the impact of global energy markets, including the ongoing geopolitical instability, these interventions aim to provide meaningful assistance during what is expected to be a difficult winter for many families.