Emergency energy relief measures announced for businesses and households

These relief measures will limit the cost of gas and electricity and looks set to be funded through increased government borrowing.

From October 1st, a price cap guarantee has been offered to businesses for an initial six months. Energy costs will be capped at the same price per unit or kilowatt hour as offered to households in the UK. Midway through this six-month period, the Business Secretary will work with vulnerable sectors to determine if more targeted support is needed through the remainder of the winter and beyond the new year.

From the same date, the average home will see annual energy costs capped at £2,500, providing much-needed clarity for households. This is lower than the £3,549 price cap that would otherwise have occurred without government intervention. The new Prime Minister, Liz Truss, believes this move will slash inflation by up to five percentage points. Originally, the price cap was intended to apply to households for two years. However, on 17th October, the Government announced the support will now only continue to April 2023. Beyond this, there will be a Treasury-led review to consider both household and business support going forwards.

The £400 Energy Bills Support Scheme, paid monthly over the six months from October to March, will remain in place.

The formation of a new Energy Supply Taskforce was also confirmed, with a remit to renegotiate long-term contracts with domestic and international gas suppliers, reducing the price paid for energy over time.

A new £40 billion liquidity fund has also been established in partnership with the Bank of England to underpin suppliers in the wholesale energy market, in a bid to manage volatility.

A review of energy regulation to address long-term supply and affordability and a concurrent review to ensure the government’s ‘net-zero by 2050’ target is “pro-business” and “pro-growth” has also been scheduled.

Date published 8 Sep 2022 | Last updated 20 Oct 2022