Martin Lewis explains how £200 energy bill discount works to clear up ‘confusion’

is titled "How the new flat-rate £200 home energy bill loan really works, Martin Lewis video explainer..."

Martin said: "What will happen is this - in October, on every single electricity bill in England, Scotland and Wales, you will either have your bill reduced by £200, or you'll be given a bill credit.

"If you're on prepay, they'll pay it through your smart meter or they'll give you a voucher or a cheque."

This will be applied automatically to every single bill, he said, and is not optional - you can't choose not to get it.

He said: "Then from the following April, and for five years after that, you will then have your bill automatically - without choice - increased by £40 a year. That is how it will work."

He said the best way to think about the scheme, rather than a discount or loan, is as a levy - but initially this will be a "negative levy" which means you get money back.

Then there will be a £40 levy over the next five years to return that money.

Martin also highlighted that the scheme does not involve a personal loan to individuals, and there is no interest payable like there is with a loan.

For example if you were living with parents, the household would get a £200 discount in October.

If you then moved out you would have the £40 "levy" added on to energy bills you were paying from April 2023.

Chancellor Rishi Sunak announced the bill help along with a £150 council tax discount for millions of Brits in an attempt to ease the cost of living crisis.

RISING BILLS

Soaring wholesale gas costs, global demand and restrictions in the supply of gas which comes from abroad are behind energy bills rising.

The announcement of extra help came as energy regulator Ofgem said that the price cap will rise from £1,277 to £1,971 - a rise of £693.

For those on prepayment meters the price cap will rise from £1,309 to £2,017 - an increase of £708.