Prime Minister announces plans to cap household and business energy bills

Prime Minister Liz Truss has unveiled new proposals to curb both domestic and commercial energy bills.

In an address to Parliament on 8th September, the newly appointed Prime Minister announced proposals to cap domestic energy bills from 1st October at £2,500 for a typical household for the next two years. Proposals will see Ofgem’s October price cap, estimated at £3,549 for a typical household, replaced – the price cap currently stands at £1,971. The £400 Energy Bill Support Scheme will also remain in place this winter. Discretionary payments will also be paid for those who use LPG and heating oil in place of mains gas.

Liz Truss also confirmed that a similar cap would also be in place to protect businesses from spiralling energy bills for the first time. The scheme is set to be in place for six months, with tailored support for the most vulnerable industries to be set out beyond that time. Full details of the scheme and cap are yet to be published.

Commenting following the Prime Minister’s appointment, General Manager of International Travel Awards-winning Oddfellows on the Park in Cheadle, Helio Correia explained how rising energy costs were affecting the business and the scale of the challenge being addressed by any intervention on prices:

“Small businesses won’t be able to survive without a strong bold policy on [energy costs]. For hospitality this is a worse situation than Covid, as this time around we simply can’t do anything to mitigate the increasing costs.

“We all know what’s the economic situation at the moment and we all feel it as individuals, however as a business all the increasing costs are being absorbed by the business and not reflected on our selling price, that would simply make us unaffordable.

“Over the last few months we have noticed a steep decrease on what people are spending on non essential goods.

“Just to show how bad the situation is, on Q1 we have spent more in gas than all last year: that’s an increase of over 300%, a month ago. We’ve had an offer to renew our current contract which increases to an extra 150%, that offer been reviewed just a couple of days ago with a further increase of over 80%.”

The Prime Minister has also announced a review of the government’s energy policy, with ambitions to turn the country into a net energy exporter by 2040 and shore up the UK’s energy security long-term, as well as an immediate lifting of the ban on fracking for shale gas. Energy providers will also benefit from a £40 billion fund to ensure their liquidity and protect consumers from the collapse of further firms.

In a written ministerial statement, Business and Energy Secretary, Jacob Rees-Mogg confirmed the Chancellor will set out the expected costs of support as part of the fiscal statement later this month, when further details of schemes are expected to be announced.