Billions of pounds worth of promised energy help will be ditched in a major Budget U-turn, which leaves Liz Truss's plans - and premiership - in tatters.
New Chancellor Jeremy Hunt, has junked the flagship Energy Price Guarantee beyond next April in a surprise announcement - in an attempt to stabilise the markets.
The Mirror reports that instead of average energy bills becoming capped at £2,500 per year for two years with all households eligible, the assistance will now only be universal for a mere six month period.
Read more: More U-turns expected as Chancellor Jeremy Hunt to make surprise statement
After the six-month period, the help and assistance will only be available to the poorest. Mr Hunt signalled that the assistance will be 'significantly less than planned', just as bills are set to top £5,000 per year.
A treasury review will take place to decide exactly who will be eligible for further help, and how much assistance they will receive.
In one of the biggest Budget U-turns in the political history of the United Kingdom, Hunt also scrapped nearly all of the remaining measures from Kwasi Kwarteng's mini-Budget - including £2bn changes to the IR35 tax rules for self-employed people, a £1bn cut in dividend tax, £2bn VAT-free shopping for visitors to the UK, and a £600m freeze on alcohol duty.
Furthermore, he is also plotting to scrap plans to cut Income Tax from 20p to 19p in every pound next April. Income Tax might not even be cut in 2024 - like the Tories promised.
Instead it will remain at 20 per cent 'indefinitely until economic circumstances allow it to be cut', saving £6bn a year.
Only two major announcements from the mini-Budget three weeks ago - a cut to Stamp Duty and a cut to National Insurance from April - will still take effect. It comes after ministers already junked a £19bn-a-year cut to corporation tax - despite Liz Truss saying this 'would damage growth and innovation' - and U-turned on plans to remove the 45p top Income Tax rate for the wealthiest Brits.
Mr Hunt said put together the changes announced today will save the public purse £32billion a year - in a change which effectively bins Ms Truss's entire strategy of cutting taxes to fuel growth. In a handbrake turn that leaves Ms Truss clinging to her job, he said: "The United Kingdom will always pay its way."
Just weeks ago she had planned to borrow more than £70bn for her plans.
Warning of sweeping austerity cuts when he delivers a full fiscal plan on October 31, Mr Hunt added: "All departments will have to redouble their efforts to find savings."
No10 confirmed Whitehall departments will be asked to 'look again' at what spending they can cut.
Chancellor Mr Hunt will meet with all Secretaries of State this week to decide on future spending plans which will then be submitted to the Office for Budget Responsibility this Friday. The change to energy bills is the most dramatic, unexpected and - for many families - alarming.
Liz Truss had announced an Energy Prices Guarantee that would cap the average household's bill at around £2,500 a year for two years until October 2024. Now, it will only apply to April 2023.
Beyond that point, the government will design a new energy package that will 'cost the taxpayer significantly less' and focus on the most vulnerable. It comes despite Tories repeatedly attacking Labour for only guaranteeing six months' support.
Liz Truss said at PMQs last week: "We have taken decisive action to make sure people are not facing energy bills of £6,000 for two years. I think we remember the Opposition is only talking about six months!"
A fourth Tory MP, Angela Richardson, today said it is 'no longer tenable' for Liz Truss to stay in office after three others called for her to resign yesterday.
On energy bills, the Treasury said in a statement: "The Prime Minister and the Chancellor have agreed that it would be irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices. A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023.
"The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need. The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency."
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