Household energy bills to be capped at £2,500 for next two years in Truss's 'energy price guarantee'
This is a huge announcement but whether it's enough to help people through this crisis will be the big question, reports Shehab Khan
A typical household will pay no more than £2,500 per year for their energy bills, Liz Truss has announced under "bold" new plans to tackle soaring prices that will come into effect next month.
The government will introduce an "energy price guarantee" in England, Wales and Scotland coming into effect from October 1 - the same date Ofgem was set to lift the price cap by 80%.
Ms Truss said the same level of support will be provided to Northern Ireland, which operates under a different energy market.
The measures will stay in place for two years and the government is to bring forward emergency legislation to get it over the line quickly.
The PM's plan - paid for by tens of billions of pounds of borrowing - will save the typical household around £1,000 and protect billpayers from further expected rises over the coming months.
Labour leader Sir Keir Starmer said the package was welcome but reiterated that the plan "does not come cheap” and warned "the bill will be picked up by the working people".
Households will still receive the £400 energy bills rebate in six instalments, which was announced by Rishi Sunak earlier this year.
Businesses, schools and hospitals will also receive equivalent support under a six-month scheme over the winter months.
However, plans for businesses - which are not covered by an energy price cap - were so far scant.
Ms Truss said there will be ongoing support for the most vulnerable industries, with a review in three months’ time to decide where the help should be targeted.
A breakdown of the plans
Average household bills in England, Wales and Scotland capped at £2,500 per year
Equivalent support to be rolled out in Northern Ireland
Energy Price Guarantee comes into effect from October 1, lasting two years
Six-month scheme for businesses, schools and hospitals to receive equivalent support
Package for specific, vulnerable industries like hospitality to follow
£400 energy bill rebate will still be rolled out
Ban on fracking in England will end
Martin Lewis told ITV News that although the plans "won't help everything" they will "make a very large difference to tens of millions of homes"
The cap will work by limiting the price suppliers can charge customers for units of gas. Green levies worth around £150 a year on average will be temporarily removed from household bills.
Ms Truss told the Commons: "This guarantee supersedes the Ofgem price cap and has been agreed with energy retailers.”
“This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options," she added.
Downing Street has refused to put a cost on the programme, previously estimated to cost up to £150 billion. The PM's official spokesman would only say the price will be “tens of billions”.
Mid-way through the debate, the Labour leader was handed a note and he rushed out of the Chamber.
Shortly after, the prime minister also left.
While it was not immediately clear what news the leaders had received, a short while after, Buckingham Palace announced the Queen was under medical supervision at Balmoral, after doctors became concerned for her health.
Prince Charles and Camilla have arrived at Balmoral to be with Her Majesty, while Prince William is also on his way.
A Palace spokesperson said though doctors are concerned for the Queen, she "remains comfortable and at Balmoral".
Sir Lindsay Hoyle interrupted the debate in the Commons to "send our best wishes to Her Majesty the Queen and that she and the royal family are in our thoughts and prayers at this moment".
Ms Truss - who was sworn in by the 96-year-old monarch on Tuesday - tweeted after to say the "whole country will be deeply concerned by the news from Buckingham Palace".
"My thoughts - and the thoughts of people across our United Kingdom - are with Her Majesty The Queen and her family at this time," she added.
Sir Keir tweeted to say he was "deeply worried" and also said his thoughts were with the Queen, adding: "I join everyone across the United Kingdom in hoping for her recovery."
Before the interruption, Ms Truss said the government will set up a fund for those using heating oil, living in park homes or those on heat networks so that all UK consumers can benefit from “equivalent support”.
"We are supporting this country through this winter and next and tackling the root causes of high prices so we are never in the same position again," she added.
She said the cap on prices will "give people certainty on energy bills, it will curb inflation and boost growth".
But Sir Keir said her refusal to fund plans with a windfall tax showed she was “driven by dogma” and again accused her of "protecting the excess profits of oil and gas companies".He accused her of "handing a tax cut to banks and amazon" while "households need every penny they can get".
The Labour leader added: " It's a very simple question of who's side are you on?"
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The government hopes that the measure could curb the cost of servicing the national debt by reducing inflation by up to 5 percentage points from the predicted peak, with external forecasts estimating inflation could hit up to 15% next year.
Under the current domestic energy cap, households face average bills of £1,971 but this was set to rise to £3,549 in October – and forecasts have suggested it could hit as high as £7,700 by April 2023.
In further announcements, the PM said the ban on fracking - the process of extracting shale gas by fracturing rocks with high-pressure water - in England will end, meaning production of domestic shale gas could begin in as little as six months.
The measure is part of plans to "speed up our deployment" of clean and renewable technologies including hydrogen, solar, wind, and carbon capture and storage.
“Renewable and nuclear generators will move on to Contracts for Difference to end the situation where electricity prices are set by the marginal price of gas," Ms Truss continued.
“This will mean that generators are receiving a fair price, reflecting their cost of production, further bringing down the cost of this intervention.”
Ms Truss, who was sworn in as prime minister on Tuesday, along with her newly-appointed Cabinet, has been under mounting pressure to reassure Britain on how the government will get people through the winter.