Millions of households will receive £350 of government support to help protect them from rising energy costs, Chancellor Rishi Sunak told MPs, but more than half the money is actually a loan.

The news comes as the energy price cap rises by 50% to £1,971 from 1 April, representing a £693 increase to average bills on variable rates. At the same time the Bank of England raised the interest rate to 0.5% with immediate effect.

All domestic electricity customers will get £200 off their energy bills from October, with 80% of households receiving a £150 council tax rebate on properties from Band A to Band D from April. This one-off payment will benefit around 80 per cent of all homes in England and the council tax element will not have to be repaid.