Martin Lewis explains inflation and energy bills

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As part a package worth £5 billion, the Government promised a £650 payment to eight million households in Britain claiming benefits. The payment will help ease the struggle many families are going through as the cost of living crisis continues to bite.

Chancellor Rishi Sunak revealed that families who receive means-tested benefits will receive the £650 payment.

Inflation is at its highest rate in 40 years and prices are rising by around 9 per cent with the cost of goods and services skyrocketing.

To add further misery, energy bills have shot through the roof for most people as the energy price cap has increased.

The Chancellor told Parliament in May: “We are meeting our responsibility to provide help for those on the lowest incomes.”

Those eligible for the £650 payment will receive it in two instalments to their bank accounts.

The payments will be made automatically and people do not need to apply for them.

The payments will not be taxed or have any impact on the benefits someone is already receiving.

The first chunk of money will be sent in July to immediately help people who are struggling the most.

A second instalment will be made in autumn although a specific date for this has not yet been set.

This payment is expected to come just in time, as in October it is thought energy bills will once again increase when the energy price cap goes up.

The energy price cap rose by £693 in April and left millions with huge bills to pay.

Record increases in global gas prices were behind the increase which saw bills for those on a default tariff paying by direct debit increase from £1,277 to £1,971 per year.

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The price cap allows utility companies to pass on reasonable costs such as higher market prices onto the consumer.

Jonathan Brearley, the chief executive of energy watchdog Ofgem, said of the increase: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet.”

The Government hopes the new package of support will ease the pressure on struggling families.

Mr Sunak blamed the war in Ukraine and the post-pandemic period for the huge rise in the cost of living.

As part of the package, the Government also promised a £400 payment to every household in Britain from October.

There were also payments being prepared for pensioners who receive winter fuel payments.

Another payment of £150 in September was promised to six million people who receive non-means-tested disability benefits.

The money for the payments will be raised with an energy profits levy of 25 per cent on oil and gas companies.

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