Rebate repayments could leave some renters out of pocket

Some tenants in private rented housing could end up out of pocket as a result of the government’s plans to ease the energy bills shock this winter, Alan Whitehead has warned.

In an interview with Utility Week, the shadow energy minister expressed concerns about the £9.1 billion support package unveiled by Rishi Sunak last week.

The biggest element of the chancellor’s package is the £200 rebate on electricity bills households will receive this October.

This money will then be recouped from bills in £40 per annum tranches over the following five years.

Whitehead said the proposal, which Labour has branded a “buy now, pay later” scheme, is a “last minute effort that is not particularly well thought through” like the government’s botched Green Homes Grants.

As an example of the details that need to be ironed out with the loan scheme, he cited the situation in which landlords pay utility bills in rented accommodation because of the rapid turnover of tenants, such as shared housing.

In these arrangements, the Labour energy spokesman said the landlord would receive the £200 discount this autumn.

However, he expressed concern that tenants, who move out and become responsible for their own energy bills, could then be liable for the £40 top ups even though they did not benefit from the original discount.

Whitehead also warned that the anticipated further rises in energy bills could mean that any relief from the chancellor’s package would be short lived.

“The other key issue is what is round the very next bend because we have the next price cap to consider and that looks like it will be another couple of hundred.

“Altogether this is a pretty unimpressive set of measures that won’t have much effect in the longer term since we are in it for the longer term as far as price increases are concerned.”

Rather than “sticking plaster” solutions in the form of short-term cash support, the government needs to come forward with broader reforms of how the energy market will work in the future, he said: “You need to put a cast on the leg so it can get better rather than a couple of bandages.”

And Whitehead defended Labour’s own proposed energy bills support package, including an Exchequer-based expansion of the Warm Home Discount scheme and a temporary VAT cut on energy bills, which would both be funded by a windfall tax on gas and oil producers.

He rejected the government’s argument that a windfall tax would stifle investment.

“These are people making huge sums of money: it won’t have a huge effect on investment because these are unexpected bonuses, they didn’t expect to be making this kind of money.

“It would have been a sensible thing to do certainly for the next year.”