Gas and electricity bills will go up by an average £500 a year from April, Jeremy Hunt said as he raised the minimum price for a unit of energy that homeowners will be charged. The new rates will mean that an average home will pay around £3,000 a year for energy - up from £2,500 now.
Without government support, bills would have been likely to hit £3,740 a year in April, according to consultancy Cornwall Insight. There will be additional payments for people on lower incomes to help them pay their energy bills. Mr Hunt also announced an extra £900 support for people on benefits, an extra £300 for pensioners and an extra £150 for people on disability benefits towards bills.
There is only a cap on the price of a unit of energy not on the total amount that a household will pay. The government pays the difference between the cap and the price of energy paid by the providers. A family living in a five-bedroom house might expect to see a bill of about £4,200, which is a rise of about £700.
The policy was brought in by Liz Truss, whose scheme was equivalent to a £2,500 bill for a household a year. She also gave everyone £400 to help them pay their bills, whereas Jeremy Hunt's cost of living support is limited to those on benefits, pensions or disability support.
Adam Scorer, chief executive at National Energy Action, said that "the breathing space for households struggling with energy costs will now be shorter lived and less helpful".
"There is now no end in sight to the energy crisis for struggling households. For most, it looks as if it will get even harder," he said.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said the number of households suffering fuel poverty would rise from seven million this winter to up to 8.6 million households.
"We are already seeing the horrific impact of living in cold damp homes on children, the elderly, disabled and those with illnesses ranging from cancer to asthma.
"Even with the additional funding pledged to the NHS and social care system today, it risks being overwhelmed by the energy bills crisis and millions will suffer."
Local authorities will get an extra £1billion to help people pay their energy bills.
