It's been a busy morning with lots of announcements that will impact household budgets for millions around the UK.

So what are the key details so far?

• The energy price cap will rise by £693 in England, Wales and Scotland from April, a record rise that charities say will push many people into fuel poverty
• Ofgem chief executive Jonathan Brearley says the price gap is going up so much because the energy market faces a "once in a 30-year event"
• Chancellor Rishi Sunak outlines plans to ease cost of living pressures, with a £200 discount on all electricity bills from October - that will be later repaid - and a £150 council tax rebate for those in bands A to D
• Labour criticises Sunak for not scrapping VAT on energy bills to help people dealing with spiralling costs

• The Bank of England increases interest rates to 0.5%. Find out how this might affect you

It's a lot to take in. So why are energy prices so high? How does the price cap work? And what help is on offer?

Read this now.

More reaction now to the rise in energy bills - we've been talking to Donna Elliott, a mum of three, who runs a foodbank in Leicester.

She is on a prepayment meter and could see her bills go up by £700.

She says this is "going to be devastating" - not just for her, but [for] people in a similar position.

"How are we going to find the extra money?"

"We're going to have to cut down. We're going to have to start saving. We don't spend money on luxuries now," she says.

Donna says the rising bills will mean "more poverty, more fuel stress, more people coming to the food bank".

More rate rises to comepublished at 12:39 Greenwich Mean Time 3 February 2022

12:39 GMT 3 February 2022

Faisal Islam
BBC Economics Editor

This is a relatively modest movement but what it shows is that we are at no.2 of what is surely now going to be a series of interest rate rises.

This will particularly affect people on variable mortgages, and we'd expect another two by the end of the year.

This is what you expect when you have a forecast of inflation rising to over 7%.

(In case you're a little confused - the Bank of England raises interest rates - the cost of borrowing - to try and control rising prices, which is known as inflation.)

Kevin Peachey
Personal finance correspondent

Image source, Getty Images

Some 1.1 million homeowners on standard variable rate (SVR) mortgages will see their monthly repayments typically increase by £15.96 as a result of today's increase in the base interest rate to 0.5%.

The 850,000 people on tracker rates will pay £25.76 more a month.

These figures come from banking trade body UK Finance.

Image source, PA Media

The rapid rise in inflation led to some members of the Bank of England’s Monetary Policy Committee to call for a bigger rate rise.

Four of the nine members wanted to increase rates by 0.5 percentage points to 0.75% to ward off fears that price rises could become more sustained.

Instead the committee voted by a majority of five to four to increase the base rate to 0.5%.

The chancellor says the government had "already started cutting taxes" and it was his ambition to carry on with that.

Rishi Sunak has been facing criticism that the National Insurance increase of 1.25p in the pound from April will put further pressure on the cost of living.

Speaking to the BBC's Laura Kuenssberg about his claims to be a low-tax Thatcherite, Sunak says he has had to deal with the pandemic and the biggest economic shock in 300 years.

Image source, UK Parliament

Back in the Commons, and following his announcement of help for households facing rising energy bills, Labour MP for Rhondda Chris Bryant tells the chancellor that "£350 isn’t going to touch the sides of the problem for my constituents".

He lists how costs have risen: gas and electricity up by £686, fuel rising by £314, the average weekly shop up by £385 over the course of a year, Universal Credit cut by £1,040, National Insurance up by £150 and frozen tax allowances costing £300.

It's a total of £2,875 a year in additional costs in a place where the average salary is £27,000, he says.

He concludes: "That is really going to cause hardship."

But Sunak tells him that Labour's proposals on energy would have saved less than his plans.

BBC Radio 5 Live

People have been telling Nicky Campbell on BBC Radio 5 Live about how increases in the cost of energy have been affecting them.

Jeremy in Framlingham says it's "pretty rubbish at the moment" – energy bills have gone from a sharp intake of breath to something "that worries you daily".

He works from home, and has been wearing coats in his house over the past few months. He says he will sometimes skip a meal to save a fiver to have some money to help pay the bills.

Cerys in Warrington says he's already having trouble with his bills. He signed up for a deal that was £74 a month, and they've recently nearly doubled it to £140 a month.

"It's unacceptable. I'm disabled. I very rarely get a chance to go out," he says, adding he can't cut back on his spending any more, because he's got nothing left.

Jenny Maskall, debt adviser for Powys Citizens Advice Bureau, says it's normally a shock like losing your job that sends people's finances spiralling out of control. But now people are coming to her who are just facing problems with the "cost of living creeping up".

The Bank of England has raised interest rates for the second time in three months in a bid to cool soaring prices.

The increase to 0.5% from 0.25% comes as prices are climbing at the fastest rate in 30 years, and there are fears that pace will accelerate.

By putting up interest rates, the Bank of England hopes to make borrowing and spending more expensive, dampening down consumer prices.

But some analysts question whether it will work as major factors driving inflation - such as soaring energy bills - are dictated by global forces.

Latest figures show inflation hit 5.4% in the 12 months to December, and the Bank of England has today warned the rate could reach around 7% in the spring, well above its target of 2%.

The Bank of England has increased the base rate by 0.25 percentage points to 0.5%.

The chancellor responds to Labour's statement, saying that scrapping VAT would have saved only £90 per household, compared with the £150 saving being delivered through council tax.

He says it is clear that the price rises are caused by global factors. "No British chancellor can change what is going on in Asia or stop a nuclear power plant going offline in Germany," he says.

But he says he is proud of the government's record in helping the most vulnerable.

All eyes will turn to the Bank of England shortly when it announces its decision on interest rates at midday.

Experts have predicted an increase in the base rate to 0.5% from its current level of 0.25%.

In December 2021, the Bank increased the base rate by 0.15 percentage points to 0.25%, the first rise for three years.

Rising interest rates make things like mortgages more expensive.

Council tax rebate will be overshadowed by NI increasepublished at 11:55 Greenwich Mean Time 3 February 2022

11:55 GMT 3 February 2022

Darshini David
Senior Business Correspondent

The £150 rebate on council tax bills for homes in Bands A-D will benefit 80% of households and may help ease the pain of surging energy bills.

But the savings may be overshadowed by the increase in National Insurance contributions due the same month.

That will strip more than £200 out of the annual pay packet of a worker on £30,000.

Image source, House of Commons

Labour's shadow chancellor Rachel Reeves criticises Sunak for not scrapping VAT on energy bills.

She says despite the chancellor's pledges the "uncomfortable truth" is that families in Britain will still be paying hundreds of pounds more for energy after April.

Millions of people will be cutting back to pay the bills, Reeves adds.

She describes the plan to provide a £200 discount on energy bills as a "buy now pay later scheme that loads up costs for tomorrow".

Image source, UK Parliament

Sunak mentions that some people had called for VAT on energy to be cut in order to reduce bills, but he says that would disproportionately help wealthier households.

He says there would be no guarantee energy suppliers would pass on the savings and he suggests it would become "a permanent government subsidy".

The chancellor says his plan will provide "more generous support, faster, to those who need it".

The chancellor says that the energy bill help only applies to England, Scotland and Wales, because Northern Ireland has its own system.

But he says he will provide £150m for Northern Ireland to provide its own support.

The council tax measures only apply in England, so £565m will be given to the devolved administrations in the rest of the UK to offer similar levels of help.

Sunak says he will give people in council tax bands A to D a £150 council tax rebate in April.

It will mean 80% of council tax payers in England get the saving.

There will also be £150m for local authorities in England to help lower income households.

We will spread out the price shock of rising energy bills over time, Sunak tells the Commons.

He says the government wants to make sure the increase in prices is smaller initially and spread out over a longer period.

And so all domestic electricity customers will receive a £200 discount on their electricity bills from October and this discount will automatically be repaid from people's bills in equal £40 instalments over the next five years.

Image source, UK Parliament

Rishi Sunak says the economy has recovered quicker than expected from the pandemic and the UK should be proud of its economic record.

But for all the progress the number one issue on people's minds is the rising cost of living.

He says the government will "step in" to help people deal with one of the biggest costs they face - energy.

Without government action the price cap rise would be incredibly tough for millions of hard-working families, Sunak adds.

Chancellor Rishi Sunak is on his feet in the Commons where he is making a statement on the rise in the energy price cap.