UK Launches £2.6 Billion Energy Payment and Debt Relief Scheme

Chancellor John Healey announced a £2.6 billion scheme to provide a £100 energy payment to approximately 20 million households in England within council tax bands A to D. The payments, intended to provide breathing space amid rising bills linked to conflict in the Middle East, will be paid directly into bank accounts starting in January 2027. Healey urged devolved administrations in Scotland, Wales, and Northern Ireland to implement similar support, noting that funding would be provided to facilitate this. Financial expert Martin Lewis advised homeowners to verify their council tax bands, warning that up to 400,000 people in England and Scotland may be in the wrong band, which could affect eligibility.

Beyond direct payments, the government introduced a Debt Relief Scheme in partnership with the Office of Gas and Electricity Markets (Ofgem). Scheduled for a spring 2027 launch, the program will write off energy arrears accumulated between 2022 and 2024 for up to 2.4 million vulnerable customers, including pensioners and those on disability or means-tested benefits. To qualify, customers must engage with suppliers to establish repayment plans.

Additional cost-cutting measures include extending the VAT cut on electricity bills until July 2027 and a request for the Office of Gas and Electricity Markets (Ofgem) to remove standing charges from gas bills by 2027. Local authorities will also receive £100 million to provide discretionary support to those ineligible for the primary payment. Government analysis suggests these combined strategies could save typical households £130 over a decade.