Sunak considering £600 payment to help poorer families heat homes

Three million less well-off households could be given a payment of up to £600 to help them with fuel bills, under plans being considered by chancellor Rishi Sunak.

It is understood that a one-off increase in the Warm Homes Discount – currently worth £150 a year – is one option being looked at by the chancellor, who is coming under growing pressure to deliver a package of help for the cost-of-living crisis.

A Treasury source this morning said that no plans had so far been finalised and Mr Sunak continues to consider “a wide range” of possible policy responses.

But the source did not deny a report in The Times that one option drawn up by Treasury officials is a boost of £300, £500 or £600 to WHD payments going out from October.

And responding to suggestions that the move could be followed by a 1p cut to income tax in the autumn budget, the source said only that Mr Sunak had consistently said he would reduce the tax “when fiscal circumstances allow”.

Pressure for action from the chancellor was heightened by today’s announcement that inflation has reached a 40-year high of 9 per cent, driven by punishing hikes in energy costs in April. Less well-off households are faced with an increase of almost 11 per cent in their cost of living, because a higher proportion of their spending goes on fuel and food.

WHD payments to 3 million of the poorest households in England and Wales were increased from £140 to £150 this year.

An additional one-off payment would cost the Treasury £1bn, but is understood to be regarded as an attractive option because there is less risk of it becoming permanent than if the same money were spent on a significant increase in benefits.

It is understood that, if adopted, the increase would be funded by the Treasury rather than through a levy on energy bills, as is the case with the current discount.

Mr Sunak is resisting pressure for an emergency budget to respond to the cost-of-living crisis, with Labour forcing a vote on the issue in the House of Commons today. Keir Starmer’s party is calling for a windfall tax on the excess profits of North Sea energy companies to fund a £600 cut in domestic fuel bills.