Leeds charity criticises Rishi Sunak's 'disillusioned' plans as energy bills set to soar by £693 a year

It comes energy regulator Ofgem was forced to hike the energy price cap to a record £1,971 for a typical household as gas prices soared to unprecedented highs.

The decision is likely to impact 22 million households across Great Britain, with energy bills will going up by £693 per year from the beginning of April.

Shortly after the announcement, Chancellor Rishi Sunak promised that all 28 million households in Britain would get a £200 up-front rebate on their energy bills from October.

The Government will provide the cash for this, but it wants the money back so will hike bills by £40 per year over the next five years from 2023 to recoup its cash.

Mr Sunak also promised a £150 council tax rebate for homes in bands A to D, something he said would cover around 80 per cent of homes in England.

A total of 293,881 households in Leeds would be eligible for this rebate.

Sylvia Simpson, project director at Money Buddies, a free money and debt advice service, called the plans "disillusioned".

Ms Simpson, said: "I was shocked that he is just putting all utility customers into debt by £200 and thinks it's alright.

"He thinks it's helping the most vulnerable but it's just so disillusioned.

"It sounds good when you're stood at that podium when you're answering questions or making statements in Parliament.

"That's all well and good but the council tax is going up so people won't see that £150 quid, they'll see less - so it's chocolate money.

"It may help a little bit which is good but it's nowhere near enough. It's not £693, is it?

"Over the next five years, people will have to pay back in £40 instalments so it's put all utility customers in debt by £200 quid.

"As I say, it's great when you say it on the podium like that, but when you drill down into what is actually said, it's not as great. It's sneaky."

Leeds West MP and shadow chancellor Rachel Reeves echoed Ms Simpson's concerns.

Ms Reeves said millions of people are cutting back spending to pay bills, adding: “What do the Government offer? A buy now, pay later scheme that loads up costs for tomorrow.

“The best way of targeting support to those who need it most would be an increase to £400 and an extension to 9 million households of the warm homes discount, as Labour has proposed today. Their scheme today is a pale imitation of Labour’s, especially for the households and pensioners on the most modest incomes."

If all goes to the Government's plan, wholesale energy prices will drop so households can pay back what they owe without a major rise in bills.

Some energy company insiders worry that while good in principle, the policy is too reliant on falls in global gas prices.

Experts are not sure this will happen, at least not soon, and Goldman Sachs has already warned that prices in the gas market are likely to remain at twice their usual levels until 2025.

The price cap increase includes a £68 charge per household to cover the costs of protecting millions of customers whose energy suppliers collapsed in recent months.

However, Mr Sunak also promised £144 million to councils to support vulnerable people.

But Ms Simpson said Money Buddies has already seen people struggling with the rising cost of living.

Ms Simpson said: "People from affluent areas are already being affected. "People that are on the cusp of benefits, that earn £40 quid too much, are already being affected.

"People are struggling to buy school uniforms because all the money is being eaten up on the mortgage, increase on the gas, increase on the electric, the council tax - that's going to increase, nice to have a bit of a bonus back, thank you, but not enough.

"People might be at working from home or home because they have disabilities or aren't working, they've got the heating on and it just builds up more and more costs.

"So when the money comes in, it's gone."

She added: "There is an element of the community that's vulnerable, and I don't even think Rishi Sunak knows what vulnerable means to be quite honest with you because he kept referring to it but if he really knew what it meant he would not have done what he did and put them into debt.

"More and more people will be faced with a decision now as to whether to heat or eat because of the massive impact that this and the rest of the cost of living will be having on them.

"There are solutions to debt that are available. Every solution is different on a case by case basis but what it means is people are just going to be living hand to mouth.

"I can't believe I'm saying that in 2022.

"In all my time I've been doing this, since 1996, I can't believe I'm saying that people are going to have to start living hand to mouth."

Money Buddies has 24 services across Leeds, mainly in local communities centres.

It helps people to deal with debt issues, apply for grants and benefits and teaches people how to budget and maximise their income.

Appointments are available face to face and they are free.

People do not have to be experiencing a financial crisis to speak to them - the service is available to anyone needing support in Leeds.

Ms Simpson said: "Somewhere the system on teaching humans about finances is failing. It is falling down for many millions of people.

"What the Money Buddies do is train you how to budget, how to prioritise, how to maximise your income, how to maximise your income yourself, and show you what to do and help you apply for grants.

"Money and mental health is often related. If you haven't got enough money, you worry about it.

"You get stressed, then you get worried, then depressed and you fear looking in your bank account because you are scared of what you might see.

"As far as we're concerned, it does not matter how you got into debt, all we want to do is help you.

"Knowledge is power, the more you know, the more you can protect yourself - that is our motto."

Where to get extra support:

A spokesperson for Leeds City Council said: “We understand and share the concerns of Leeds residents regarding the rising cost of living and the difficulties it is causing.

"The council has help and support available with the Money Information Centre offering financial guidance at www.leeds.gov.uk/leedsmic.

"We are also working with Better Homes Yorkshire on free solar panels and home insulation for those on low incomes to improve the energy-efficiency of homes and keep heating costs down.

"The scheme has been extended so will be taking applications until at least the end of March. For more information visit www.betterhomesyorkshire.co.uk/leeds or call the Better Homes Yorkshire team on 0800 597 1500.”

Those worried about the impact of these changes can contact Money Buddies free of charge.There are currently 24 Money Buddies services across Leeds. You can find your nearest on the website here.

Wetherby in Support of the Elderly has information on its website to signpost people in the area to relevant organisations, if they are worried about the price rise.

Citizens Advice Leeds (CAL) and Chapeltown Citizens Advice also provides free, independent and confidential advice about concerns such as benefits, debt, employment and housing.

StepChange is a national charity that can offer free and independent debt advice and solutions, both online and over the phone.

Yorkshire Water said it is currently currently supporting a record number of customers with its financial help schemes.

Yorkshire Water has four main schemes:

WaterSupport, which helps customers on lower incomes, with income-based benefits, pay water charges.

Community Trust, an independent charity at Yorkshire Water supporting customers who have arrears.

WaterSure, which can help low-income households where there are larger families, or customers who need to use additional water for a medical condition.

Resolve, which helps those who are struggling with debt to catch up on previous bills.

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