Prime Minister Liz Truss has confirmed that an energy price cap freeze will be implemented on October 1 and run for two years.
The energy price guarantee will cap the average energy bill to £2,500, after Ofgem announced the price cap would hit £3549, sparking fears of thousands of homes falling into fuel poverty.
Currently, the price cap is sitting at £1,971, the £2,500 is still an increase, but Ms Truss says it will save households £1,000 on average. There will also be a review in the next three months to look at industries most vulnerable and decide where the help should be targeted.
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On top of the new lower price cap, all homes in Scotland, England and Wales will receive the £400 energy discount that is being handed out in instalments. Some of the most vulnerable homes will have also received a cost of living payment.
A six-month scheme will offer equivalent support for businesses and other non-domestic users such as schools and hospitals, which have not been covered by the existing price cap.
This new plan will allow the Government to limit the price suppliers can charge customers for units of gas, replacing the existing price cap set by regulator Ofgem. Through tens of billions of extra borrowing, the Government will provide energy suppliers with the difference between the new lower price, and what they were originally going to charge in October
Speaking in the Commons on September 8, Ms Truss said: “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: “For those using heating oil, living in park homes, or those on heat networks, we will set up a fund so that all UK consumers can benefit from equivalent support.”
While this will be welcomed by many, it hasn't gone without criticism with Sir Keir Starmer arguing the bill will fall on the taxpayers.
He cited estimates that energy producers could make “£170 billion in unexpected windfall profits over the next two years”.
He said: “The head of BP has called this crisis a cash machine for his company, and households are on the other end of that cash machine, their bills funding these eye-watering profits.”
He said he wanted to see the windfall tax expanded, but said: “The Prime Minister… wants to leave these vast profits on the table with one clear and obvious consequence: the bill will be picked up by working people.”
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