‘Help is coming’: Kwasi Kwarteng says government will spend £60billion in just SIX MONTHS to freeze energy bills this winter to help ease cost-of-living crisis as he cuts swathe of taxes for the most well-off
- Ministers are intervening to fix prices for business and domestic users
- Domestic bills are set to be capped at an average of £2,500 for next two years
- Businesses helped with wholesale costs for at least six months from October
The taxpayer will spend an eyewatering £60billion underwriting energy bills in just six months this winter, Kwasi Kwarteng revealed today.
Ministers are intervening to rein in bills for business and domestic users amid soaring prices fuelled by the war in Ukraine.
Domestic bills are set to be capped at an average of £2,500 for the next two years while businesses will be helped with wholesale costs for at least six months from October that could halve their outgoings.
Ministers had until now refused to get into the cost of this market intervention, but the Chancellor confirmed this morning the nine-figure cost of the package
‘The PM has acted with great speed to announce one of the most significant interventions the British state has ever made,’ Kwarteng told the Commons.
‘People need to know that help is coming, and indeed it is coming.’
It came as he unveiled the largest wave of tax cuts for 50 years, with cuts to income tax, co-operation tax and stamp duty that will mainly help the better-off.
He added: ‘The Energy Bill Relief Scheme will reduce wholesale gas and electricity prices for all UK businesses, charities and the public sector like schools and hospitals. This will provide a price guarantee equivalent to the one provided for households, for all businesses across the country.’
He added that ‘energy prices are currently extremely volatile, erratically rising and falling every hour’.
Mr Kwarteng said: ‘This creates real risks to energy firms who are otherwise viable businesses. Those firms help supply the essential energy needed by households and businesses. So, to support them, we are announcing the Energy Markets Financing Scheme.
‘Delivered with the Bank of England, this scheme will provide a 100 per cent guarantee for commercial banks to offer emergency liquidity to energy firms.’
Earlier this week Liz Truss was warned that businesses will need long term help with energy bills if prices stay stubbornly high as she unveiled a massive intervention in the market to cap prices.
The Prime Minister announced that wholesale costs would be held at half their predicted seasonal peak at a cost predicted to hit tens of billions of pounds amid fears of economic turmoil.
The new Energy Bill Relief Scheme will provide a discount on wholesale costs for all non-domestic customers from October until next March.
Speaking in New York she promised further help after that, mentioning shops and pubs, while Business Secretary Jacob Rees-Mogg suggested schools, and hospitals and care homes, could also be classed as vulnerable to receive ongoing help.
A three-month review will assess what extra help is needed in the spring when gas and electricity prices may have dropped or stayed high.
It followed an announcement a fortnight ago that household bills would be stopped from rising above £2,500 for the next two years.
The household scheme will see families charged a maximum of £2.93 per therm against an expected market price for the next year of £4.32.
It is estimated that the two schemes will mean the State is paying for more than £1 in every £3 of gas consumed.