New Prime Minister Liz Truss has announced a £150bn plan to tackle soaring energy costs in the UK. The measures, announced on Thursday, will see the energy price cap scrapped in favour of an "energy price guarantee" effectively freezing the price cap for an average home at £2,500 per year from October 1.
The price cap was due to rise a whopping 80% next month from £1,971 to £3,549 but Ms Truss' announcement will mean the average home will pay just over £200 a month. The new leader said the measures would "curb inflation and boost growth" and help millions of people worried about paying their bills, despite the fact a typical home will still be paying around 95% more than they did last winter.
MoneySavingExpert Martin Lewis recently changed his advice on fixed-rate energy tariffs saying that no fixed tariffs are meaningfully cheaper than current deals but they will be if the predicted October hikes in price go ahead. However that has been updated again after Thursday's announcement if you're one of millions of people with a fixed deal.
Read more: Martin Lewis explains what Liz Truss' plans to tackle energy bills mean for you
What happens if I'm on a fixed tariff?
While it was not officially announced by the UK government Mr Lewis tweeted on Thursday following the announcement that he had been told directly by the business secretary that consumers on fixed tariffs will be able to avail of the new price guarantee if their current price is higher. He said: "Those on fixes can either stay on them or can leave and switch to the new state subsidised tariffs with no exit penalties." All rates – including those which are fixed – will now be no more than £2,500 a year.
In further tweets Mr Lewis issued important advice for those who have fixed tariffs – especially those who fixed at a price above the new October price cap. He said: "I'm hearing fixed tariffs will have the same unit rate reduction as variable tariffs (i.e. roughly 30% off). So it looks like, unless you fixed at over the new Oct price cap level, your fix will be cheaper than moving to variable. More to check on this." Mr Lewis said more detail needed to be confirmed but added: "Just to clarify this is the same per pound reduction not the same percent reduction."
From the early indications it looks like if you have fixed your deal, unless you fixed at a price above the October price cap of £3,549, you will be better off staying on your fix than moving to a variable standard tariff. To get the latest money news straight to your inbox subscribe to our dedicated newsletter here.
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