PM Lays Out Plan To Cap Energy Bills At £2,500, Funded By Borrowing

Liz Truss has set out plans to freeze energy bills at an average of £2,500 a year for two years, as part of a package of support for homes and businesses that marks one of the biggest government interventions since the financial crisis.

- Jessica Elgot Peter Walker Alex Lawson

In her first big act as prime minister, Truss said the government would fund the scheme to reduce the unit cost of energy through increased borrowing.

The initiative is forecast to involve the transfer of £150bn in taxpayer funds to energy suppliers to make up the difference between what they pay for power in the wholesale markets and the capped consumer price.

Whitehall sources said official estimates would not come until a fiscal statement from the chancellor, Kwasi Kwarteng, expected later this month.

Truss will temporarily remove green levies worth about £150 a year on average from household bills. The scheme will cover England, Scotland and Wales, with something similar expected in Northern Ireland.

Truss also announced schemes she said would increase energy resilience, including a new round of about 100 new oil and gas licences, lifting the moratorium on fracking for shale gas, and accelerating new sources of energy supply, including nuclear, wind and solar.

She said the average household would save £1,000 from October because of the price reduction, on top of the £400 discount announced under Boris Johnson.