Rachel Reeves has confirmed a new £150 cost-of-living boost tied to energy bills, aimed at easing pressure on millions of households as part of Labour’s wider plan to tackle the cost-of-living crisis.
What the £150 payment is
The £150 is effectively a cut to annual energy bills rather than a one-off cheque, delivered through changes to how bills are calculated from April. It sits alongside existing schemes such as the Warm Home Discount, meaning poorer households can see combined savings of up to £300 on their bills.
Who is expected to benefit from the £150 cost-of-living boost
The measure is designed for “millions of households”, with the biggest gains for low-income families hit hardest by the energy and wider cost of living crisis in recent years.
People already in line for support, such as the Warm Home Discount or on lower incomes, will feel the cut most, because the £150 is on top of targeted help in many cases.
How it will work on bills
Average annual bills are projected to fall by around £150 from April under the new approach, with major suppliers such as British Gas, Octopus and Eon expected to pass on the full saving.
The change will apply whether customers are on fixed or variable tariffs, so households that locked in a deal over winter should still see prices move down further in April without needing to switch.
The £150 cut forms part of Rachel Reeves’ first Budget package as Chancellor, which is framed around “strong foundations” and bringing down both inflation and government borrowing.
Prime Minister Keir Starmer has linked this move to a wider promise that 2026 will be the year when families finally start to feel a real improvement in their finances, after several years of crisis-level prices.
How to receive the £150 cost of living payment
Households do not need to apply specifically for the £150 cut; it is embedded in tariff and pricing changes rather than run as an application-based grant.
People are still urged to check council schemes and discretionary funds such as Household Support Fund-style help or Warm Home Discount eligibility, as these can stack with the £150 bill reduction for much larger overall savings.