Energy bills rebate for millions set to be wiped out by real-terms cut to state pension

Rishi Sunak announced a £150 council tax rebate and £200 loan on energy bills to tackle a surge in the price cap – but Labour say a couple’s pension will be worth £355 less next year

Pensioners will see their energy bills rebate wiped out by Tories’ real-terms cut to pensions, Labour warned tonight.

An analysis by the party shows that soaring inflation – and the Conservatives breaking their manifesto pledge on the triple lock – means a basic state pension will be worth around £222 less in real terms over a year than in 2021/22.

For a couple it will be worth around £355 less.

By comparison, most households in England are getting £350 off their bills as part of a package Rishi Sunak announced last week.

But £200 of this will only arrive in October and has to be paid back at £40 a year for five years from April 2023.

The other £150 arrives in April and does not have to be paid back, but will only go to households in council tax bands A to D in England.

As it is a discount off council tax, it will not help those who live in larger homes or already don’t have to pay. There will be a £140m discretionary fund for people who fall through the cracks.

But Shadow Work and Pensions Secretary Jonathan Ashworth said: “The Tory cost of living crisis is set to hammer pensioners hard.”

He feared pensioners “face a tough, bleak year faced with impossible choices between heating or eating”.

The state pension is rising in April but it is based on September’s 3.1% inflation figure – which is already well behind inflation of 4.8%.

That means the £5.50-a-week pension rise will be outstripped by living costs.

Normally pensions rise by either 2.5%, inflation, or average earnings – whichever is highest.

But the Tories scrapped this ‘triple lock’ for the 2022 rise after average earnings fell during May-July 2020 due to Covid, then bounced back.

Keeping the triple lock could have handed pensioners a rise of 8.3%, essentially benefiting from a wage bounce-back while not also suffering the fall.

It comes after Tesco’s boss warned the “worst is still to come” for hard-up families battling the cost-of-living crisis.

Chairman John Allan said the supermarket’s food prices were set to soar by 5% by the spring. The latest cost surge will “squeeze” the poorest households struggling with bills, he admitted.

“In some ways the worst is still to come – because although food price in Tesco last quarter was only 1%, we are impacted by rising energy prices, our suppliers are impacted by rising energy prices,” he told the BBC.

Warning of a 5% price hike for groceries, he added: “That’s the sort of number we’re talking about.

“Of course, 5% – if you’re spending, as some of the least-well-off families are spending, 15% of household income (on groceries) – is significant.”

Business Secretary Kwasi Kwarteng said the Government was helping households through rises in the minimum wage and help with energy bills.

All households will get £200 off from October.

But the money has to be repaid at £40 a year for five years from 2023/24 to 2027/28. Mr Kwarteng conceded young Brits face repaying the loan without ever receiving it.

Campaigners fear people in their late teens, or who have a “bills included” landlord, will end up paying £40 a year without seeing the £200.

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