New Prime Minister set to cut energy bills

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The new Prime Minister Liz Truss, who succeeded Boris Johnson just yesterday, 6th September 2022, is understood to be all guns blazing when it comes to rising energy bills. Ms Truss is expected to borrow billions to limit energy costs for individual households and businesses across the nation.

So far, it is understood the PM could cap energy bills at £2,500. Full details are expected to come out tomorrow, 8th September. The latest price cap, which comes into force October 1st, will bring the average household bills up from £1,971 annually to a staggering £3,549. With the cost of living rising rapidly, help is needed desperately. Will Liz Truss be the one to help us?

Currently, there is a £400 energy grant being given to every household in the UK from October. This will be split over a six-month period. Households are not expected to pay this back.

The costs

The package from new prime minister Ms Truss is expected to cost a whopping £100 billion. It is unclear, however, how long the government will reduce the energy cap for, and how tax payers will be expected to pay back this fortune. Ms Truss has vowed to “deliver on the energy crisis”, with millions hoping for real, effective support.

There has been news of energy companies producing plans to help customers with their energy costs though a government-backed fund. Energy companies would dip into this fund to subsidise energy bills, with the additional costs being added to consumer bills over a longer period to spread the cost. However, it is said the government are reluctant to see money added to consumer bills for up to 20 years into the future.

A move to borrow £100 billion as well as cutting personal taxes and boosting public spending could pose a challenge. Additionally, UK government borrowing hit an eight-year high this week. This adds even greater pressure to the new PM as she takes up office.

However, the total needed to bring down the energy price cap will fluctuate. This depends on the wholesale prices of gas and electricity.

As usual, here at MoneyMagpie we will try to keep you as updated as possible as news emerges.