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What does the government’s latest U-turn mean for energy bills?

The Energy Price Guarantee, which caps annual bills at an average of £2,500, will now only last until April 2023

Written by
Faima Bakar

The last few months have been pretty hectic for this country but the changes keep on coming. Last month, Prime Minister Liz Truss outlined her plans to deal with soaring energy bills affecting millions around the UK. This included the Energy Price Guarantee which caps the price that you can get charged by suppliers. 

This meant that the average annual household bill would not go above more than £2,500 from October. Without this scheme, average bills would have reached £3,549 – up from £1,277 just a year ago.

This cap was supposed to be in place for two years. However, that is now changing as the government does a U-turn (yep, another one!) on its policies. They’ve scrapped most elements of the so-called ‘mini-budget’ and have now announced the Energy Price Guarantee will only freeze prices for six months, rather than two years.

How is government help with energy bills changing?

New Chancellor of the Exchequer Jeremy Hunt has announced that the government will reduce the amount of help it is offering. Now, the Energy Price Guarantee will only be in place until April 2023.

After that the Treasury, which looks after the country’s finances, will carry out a review which will offer provisions that prioritise only those most in need.

What help are businesses getting with bills?

Non-domestic energy users such as businesses will also still receive help, but only for six months, after which a review will decide the next course of action.

From November, businesses on fixed-price contracts will be eligible for an automatic discount if their deal started after April 1 2022. Those on variable tariffs will also get an automatic discount for each unit of energy used.

Next year’s review will try to pinpoint the more ‘vulnerable’ organisations that need help beyond March 2023. 

What extra help can I get with bills?

Households will start receiving the £400 discount off energy bills this month, with the money coming in six instalments to help families throughout the winter period.

The most vulnerable households will be eligible for further support. This includes:

  • a £650 one-off Cost of Living Payment for around eight million households on means-tested benefits
  • a £300 one-off Pensioner Cost of Living Payment for more than eight million pensioner households to be paid alongside the Winter Fuel Payment
  • a £150 one-off Disability Cost of Living Payment for around six million people across the UK who receive certain disability benefits

There will also be a £500 million increase in the Household Support Fund available to councils to support vulnerable households with the cost of essentials such as food, utilities and clothing.

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