Rishi Sunak’s cost of living gamble

The Chancellor is lending £200 this year to anyone who pays an energy bill in their own name. That’s 28 million people at an upfront cost to the government of £5.5 billion.

The £5.5 billion will go directly to the companies this year, and will be knocked off bills from October. It will count as public spending.

However, we will all have to repay that £200, in five equal annual instalments of £40 from 2023. Or to put it another way, our energy bills will be £40 a year higher than would otherwise have been the case until 2028.

In a way, Rishi Sunak has given most of us an interest-free loan of £200. And we’ll only be able to dodge repayments if we stop buying energy in the UK.

So the Chancellor seems to be taking a punt that this year’s energy price surge will be temporary.