Liz Truss announces new energy price guarantee to save typical household £1,000 a year

Prime Minister Liz Truss announced her plan to deal with the cost-of-living crunch, in an address to MPs on Thursday

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Ms Truss has unveiled her long-awaited plan to guard Brits against crippling costs while boosting the country’s energy security, using emergency legislation to deliver the plan.

Addressing the House of Commons, she announced a new energy price guarantee which will hold average household bills to no more than £2,500 from October 1.

She claimed her plan will "save the typical household £1,000 a year", adding that all UK consumers can benefit from “equivalent support”.

In terms of energy supply, Ms Truss said the ban on fracking in England will end – meaning the production of domestic shale gas could begin in as little as six months.

The PM promised help for businesses struggling with bills for six months, with targeted support for vulnerable firms beyond that.

And the Government will set up a fund for those using heating oil, living in park homes or those on heat networks.

Prime Minister Liz Truss in the House of Commons
Prime Minister Liz Truss in the House of Commons
Senior Cabinet members watch on during Ms Truss' speech
Senior Cabinet members watch on during Ms Truss' speech

Ms Truss told MPs: “This Government is moving immediately to introduce a new energy price guarantee that will give people certainty on energy bills, it will curb inflation and boost growth.

“This guarantee, which includes a temporary suspension of green levies, means that from October 1 a typical household will pay no more than £2,500 per year for each of the next two years while we get the energy market back on track.

“This will save a typical household £1,000 a year. It comes in addition to the £400 energy bills support scheme.

"This guarantee supersedes the Ofgem price cap and has been agreed with energy retailers.”

The Tory leader also insisted she will not "give in" to calls for a larger windfall tax to fund her package.

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.

The £2,500 “energy price guarantee” will apply in England, Scotland and Wales from October 1, with the same level of support made available to Northern Ireland, which has a separate energy market.

The guarantee is based on the existing cap, plus the already promised £400 energy bills discount for all households, meaning costs will be similar to those faced today.

Labour leader Sir Keir Starmer said the energy plan “does not come cheap” and the refusal to fund it with a windfall tax showed she was “driven by dogma” and “it’s working people who will pay for that”.

Labour previously accuses the PM of writing a “blank cheque” to oil and gas giants by ruling out a windfall tax to pay for the cost-of-living package, with the British people left to “foot the bill”.

Ahead of Thursday’s announcement, Ms Truss acknowledged families and businesses across the country are concerned about how they will “make ends meet” over the coming months.

She blamed rising global prices on Russian president Vladimir Putin’s war in Ukraine and the “weaponisation” of gas supplies in Europe.

She said: “This has only made clearer that we must boost our long-term energy security and supply.

“We will take action immediately to help people and businesses with bills but also take decisive action to tackle the root cause of these problems, so that we are not in this position again.

“We will set out our plans to deliver on that promise and build a prosperous Britain for everyone.”