LIZ Truss has said that “a typical household” will pay no more than £2500 per year for their energy – below the predicted energy price cap rise.

It is a major intervention from the Government and is expected to cost around £150 billion – to be funded by borrowing.

Fracking will no longer be banned in England and Wales, while fossil fuel extraction is expected to be ramped up with the Government anticipating it will issue 100 new drilling licences to energy giants, the Prime Minister announced. 

The new £2500 still amounts to a rise of £529 but is lower than the predicted October increase which was predicted to see bills soar by more than 80%. 

She said: “This guarantee, which includes a temporary suspension of green levies, means that from October 1 a typical household will pay no more than £2500 per year for each of the next two years while we get the energy market back on track.

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“This will save a typical household £1000 a year. It comes in addition to the £400 energy bills support scheme. This guarantee supersedes the Ofgem price cap and has been agreed with energy retailers.”

In response to a question from the SNP’s energy spokesman Alan Brown, the new Prime Minister confirmed there would not be targeted support for those on low incomes.

The Government remains opposed to a windfall tax and Truss insisted increasing levies on oil and gas giants would "undermine the national interest by discouraging the very investment we need to secure homegrown energy supplies".

She added: "We will deliver this by securing the wholesale price for energy while putting in place long-term measures to secure future supplies at more affordable rates.”

Emergency legislation is going to be introduced to limit the increase in energy bills, Truss said, while committing her Chancellor to an update later in the month. 

In an update to MPs on Thursday, the Prime Minister said she had an eye on the long-term issues facing the UK's energy supply. 

She said the Government intended to "defray" the cost of the package by "ramping up supply". 

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Ministers were "already negotiating new long-term energy contracts with domestic and international gas suppliers to immediately bring down the cost of intervention," she added. 

And drilling for oil and gas would be ramped up, she said, adding that the Government expects to issue 100 new licences to allow extraction of polluting fuels from the North Sea. 

Cash will also be handed to energy suppliers - different from energy generators such as Shell or BP - to help them manage "price volatility", the Prime Minister said, announcing that The Bank of England had set up a new £40bn scheme for this purpose.  

The UK is still aiming to reach net zero carbon emissions by 2050, Truss said. 

But a review will be launched by Chris Skidmore, the chair of an all-party parliamentary group on the environment, to ensure it is delivered in a "way that is pro-business and pro-growth", Truss added. 

More to follow...