Household energy prices will be capped this winter after Liz Truss was forced to act on the fuel crisis.
The new Tory Prime Minister announced plans in the Commons to limit gas and electricity bill rises in a scheme that will impose a two-year cap on the unit price of power.
The plan will save the typical household £1000 a year, according to the government with the Truss government spending billions to protect people from soaring prices.
Truss told the Commons: “A typical household will pay no more than £2500 per year for each of the next two years, while we get the energy market back on track.
"This will save a typical household £1000 pounds a year. It comes in addition to the £400 pounds energy bill Support Scheme. This guarantee supersedes the OFGEM price cap and has been agreed with energy retailers.”
Business are also due to get some relief on their soaring energy costs. There will also be a fund for household on heating oil and off grid gas connections.
Truss made it clear again she would not concede to demands for a windfall tax to pay for the scheme.
She said: "This is the moment to be bold. We are facing a global energy crisis and there are no cost free options.
Truss added: “We can’t tax our way to growth.”
“The Leader of the Opposition calls for this to to be funded through a windfall tax. T hat would undermine the national interest by discouraging the vety investment we need.”
The £2500 price cap is in addtion to the £400 per household already announced for each household.
It could be topped with a cut in VAT on fuel bills in an emergency budget due later this month.
The average household’s annual gas and electricity bill was due to rise from £1,971 to £3,549 in October.
But even with the dramatic intervention in the energy market there are warning the millions will be left in fuel poverty this winter.
The End Fuel Poverty Coalition pressure group estimates that even with the energy price cap frozen at £2,500, some 6.9 million UK households will still face fuel poverty this winter, spending more than ten per cent of their income on heating and lighting, up from 4.6 million last winter.
Ed Miliband, the Shadow Secretary for Climate Change restated Labour’s call for a windfall tax to be used to part fund a rescue package for energy bills.
He said the government’s argument that this would deter investment in the North Sea and green technology was “bogus”.
Miliband said: “This is a dogma, and I’m afraid we see a pattern here. This is a shift to the right by the Conservative party under Liz Truss. “Boris Johnson and Rishi Sunak actually eventually ended up agreeing with our idea of a windfall tax.”
This investment argument is completely bogus; that it would have a damaging effect on business. Bernard Looney, the chief executive of BP, says it wouldn’t have a damaging effect.”
