The Ofgem price cap will be replaced with a "two year energy price guarantee", Prime Minister Liz Truss has announced. The guarantee means that a typical UK household will pay no more than £2,500 per year on their bills for two years from October 1, in a bid to protect families from further rising costs.
Energy bills will be frozen at £2,500 for two years ahead of the next general election as families face the cost of living crisis. The new scheme will be allocated an emergency budget, with estimates of the cost expected to be around £150bn.
A scheme for businesses, schools, hospitals and other public organisations, including charities will also "offer equivalent support" and will last for six months. Industries that are classified as "vulnerable" will receive longer-term support which will be explained later.
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There will be a review in three months to decide which sectors should receive further ongoing support. The Government will be announcing an emergency Budget this month which will dictate how much the new intervention will cost.
Money for the new guarantee will be provided through extra public borrowing, putting the cost to the taxpayers in the future. The Government will also remove green levies, worth £150, from energy bills but continue to fund projects to boost renewables.
A£400 bills discount that has already been announced by Ministers will still go ahead. The new guarantee should mean the amount average households pay is close to the current £1,971 price cap, the Treasury estimates the measures will knock up to 5% off inflation forecasts.
The fracking ban will also be lifted - with the Government claiming drilling for shale could start within six months. A new round of North Sea gas and oil licences, due to start next week, could see more than 100 new permissions granted.
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