Image source, Getty Images

Conservative leadership candidate Rishi Sunak says it is clear the energy crisis has "deteriorated" and has vowed to go further with financial support if he becomes prime minister.

"My priority is to protect the most vulnerable in our society and pensioners. That’s why on top of cutting VAT on energy bills for everybody, I would provide further direct financial assistance to those groups of people. I want them to have certainty that help is coming," he tells reporters.

He then compares his plans to that of his leadership rival Liz Truss, who has argued that tax cuts will help to grow the UK's economy.

"I can provide significant support because I'm choosing not to do other things. Alternative proposals that borrow tens of billions of pounds for unfunded permanent tax cuts don’t actually do anything to help those in need, risk making inflation worse and also risk our nation’s finances.

"My priorities, my plan, are the right ones for our country."

Writing in the Daily Mail, Truss said if she became PM she would use an emergency budget next month to "ensure support is on its way", but argued it was not "right" to announce the full plan before the contest was over.

Ominous judgement awaits next PMpublished at 12:21 British Summer Time 26 August 2022

12:21 BST 26 August 2022

Faisal Islam
BBC Economics Editor

A previously rejected scheme to smooth the price shock over a decade or two now has the backing of the whole industry.

An Energy Tariff Deficit Fund could prevent the immediate rise above £2,000 a year for bills, but at the cost of only a gentle fall from that level well into the 2030s.

It seems inevitable that there must be tens of billions more support, but the question is where it would come from.

Conservative leadership front-runner Liz Truss had said she “absolutely doesn’t support” windfall taxes. So borrowing could have to take the strain, even as interest rates are also on the rise.

It is a potent mix - inflation, slow growth and high debts - and the core reason for it all, a war-time energy shock, has so far continued to get even worse. The new prime minister will have to make an ominous judgement almost upon entry to Downing Street.

Would industry plan to slash energy bills work?

If you click on the 'play button' at the top of this page right now you can watch BBC News business reporter Lora Jones answering some of your questions. You can also watch it on the BBC News Facebook page. , external

The BBC is providing explanation and analysis all day today and we'll have more questions and answers right here a little after 13:00.

Jessica Parker
Reporting from Brussels

Europe is bracing for a prolonged crisis.

Belgium’s Energy Minister, Tinne Van der Straeten, told the BBC: “This is not going to be over after one or two winters.”

EU countries have been putting their own plans in place to try and protect the most vulnerable families through price caps, lump sum payments and tax breaks.

In Belgium, a social tariff is discounting bills for one million households. But all these measures are costing governments billions of euros.

Ms Van der Straeten concedes that such levels of government support can’t go on forever.

The Green Party politician says Europe must change it’s whole energy architecture.

She wants to see a price cap on wholesale gas prices at an EU level.

"At the same time, we need to accelerate the energy transition because renewable energy is the most affordable form of energy and will bring energy bills down.”

Damien McGuinness
Reporting from Berlin

Image source, Getty Images

Since Russia’s full-scale invasion of Ukraine in February, Germany has launched two so-called “relief” packages to help with rising energy costs and inflation - so far worth about €30bn (£25.4bn) - and is currently planning a third.

Measures include reducing VAT on gas, adjusting tax brackets so that workers have more left over in their pay packets and one-off payments to families and unemployed people.

Over the summer, all public transport, except express intercity trains, cost €9 a month. And from September, all workers will get an extra €300 payment - taxable, so that low earners benefit more.

There’s no shortage of measures and cash being spent. But that might just be the problem.

Critics say some of the measures are not targeted enough, so also help high earners who don’t need support.

There are so many small one-off payments and complicated tax tweaks that there’s a feeling of confusion, rather than gratitude about government support.

The muddle has been made worse by a controversial upcoming surcharge on household gas bills to stop providers going bust - but which might also benefit some energy companies that have seen record profits this year.

The debate is febrile and ferocious. But the government is about to announce more measures and still hopes that better communication and more targeted support will reassure nervous voters about the coming winter.

Hugh Schofield
Reporting from Paris

Image source, Getty Images

We've been hearing from the UK government on the response here, but how are other countries coping?

Laissez-faire may be a French expression, but it bears little relation to French economic policy.

Faced with the energy price crisis, the government in Paris intervened massively and early.

The result is that French consumers are seeing only modest increases in their energy bills. As early as last November, it was announced that gas prices would be frozen at existing levels for the whole of 2022.

The electricity price rise has been capped at four percent.

In addition, motorists are now accustomed to seeing a notice at the pumps, saying that the state is paying for 15 cents in every litre of fuel that they buy. This aid goes up to 30 cents per litre on 1 September.

Free marketeers will argue that the bill has to fall somewhere. And it’s true that the big loser so far is the electricity provider EDF - soon to be nationalised - which is being made to charge at below-market rates.

Eventually France’s national debt will bear the pain currently being spared the consumer.

Prime Minister Boris Johnson says the government will announce "extra cash" in September to support households during the energy crisis.

"Of course, we could see this coming [energy bills rising] and that's why we've put the steps in place that we already have," he tells broadcasters at a medical centre in Surrey.

"And don't forget that, although there will be more announcements next month, more cash coming from September onwards, you shouldn't forget that the pipeline of cash stretches out throughout the autumn," he adds.

Johnson says there will be another £650 coming for every one of the eight million most vulnerable households in October. In November, there will be another £300 to help every pensioner, and £150 extra for everybody who is entitled to disability benefits.

"There's a pipeline of cash coming through over the next few months and through the autumn and the winter. But that is clearly now going to be augmented, increased, by extra cash that the government is plainly going to be announcing in September," he adds.

Ofgem's chief executive Jonathan Brearley has held a press conference in which he was asked about people who refuse to pay their bills rather than cannot pay them.

He says: “That is damaging for any individual and also for every other customer. That will mean another cost passed on to all other customers. That’s not responsible.”

On support for pre-payment meter customers, he says Ofgem may come up with further proposals after they find out what the new prime minister comes up with.

He says it is possible that some suppliers will start putting up direct debits before October. But if you are worried about your supplier doing that, you should contact them.

He called for caution on long-term projections and added Ofgem was ready to work with the government on potential solutions.

The BBC News channel is putting some of your questions on this story to experts now. The BBC's Kevin Peachey, Laura McGadie from the Energy Saving Trust and Richard Neudegg from USwitch are on the programme. You can watch by clicking the 'play' button at the top of this page.

We'll be putting more of your questions to Kevin and financial journalist Iona Bain right here on this page a little later so stay with us.

Chancellor Nadhim Zahawi says the government knows the help it has offered on the cost of living so far is "not enough" and that it has to "do more".

More help is on its way for people struggling with energy bills, he says.

"We know we need to do more because actually the most vulnerable households have no cushion, have nothing available to them," he tells broadcasters.

The government is "working up options", the chancellor says, ahead of a new prime minister being announced on 5 September.

• What help is already on offer?

Zahawi is not expected to remain chancellor if Conservative leadership frontrunner Liz Truss wins the contest to replace Boris Johnson.

Writing in the Daily Mail, Truss said if she became PM she would use an emergency Budget next month to "ensure support is on its way", but argued it was not "right" to announce the full plan before the contest is over.

Sunak is speaking to broadcasters this morning - we'll bring you details when we get them.

Robert Cuffe
BBC head of statistics

As we've been hearing, the energy price cap - the maximum that households can be charged for each unit of gas and electricity - has risen by 80%.

It means the typical household energy bill will hit £3,549 a year from 1 October.

That rise is mainly composed of a rise in wholesale cost of 131% to £2,491.

Running costs are up by £62 to £674, VAT by £75 to £169, profit by £28 to £63.

Both VAT and profits are up by 80% since they are a fixed portion of the bill.

Here's what that looks like:

Businesses in a village that contends with some of the UK's most extreme temperatures say soaring energy prices may force them to close.

The mercury in Aboyne, Aberdeenshire, has regularly reached record-breaking highs and lows in recent years.

The Corner House Cafe, which has been open for more than 20 years, has seen its monthly energy costs quadruple to almost £2,000.

Manager Ashleigh Davidson says the increases are "criminal" and could lead to staff lay-offs and possibly closure.

"We've been here for 21 years and this is the first time I've been really, really worried about our business, about our team," she says.

"We don't want people to lose their jobs, but the way things are just now nobody knows what the future holds."

Image source, Getty Images

Ofgem announced this morning that the average household energy bill will hit £3,549 from October - a rise of 80% on the current energy price cap.

The price cap is the maximum amount that companies can charge households for each unit of gas and electricity they use.

It's set by Ofgem, the energy regulator, external, and applies to around 24 million homes in England, Scotland and Wales.

Energy prices in Northern Ireland are controlled separately.

The 4.5 million households with a pre-payment meter are covered by a separate cap.

Read more about the energy price cap here.

Faarea Masud
Business reporter

Image source, Peter Howell

For Peter Howell in Cornwall, today's announcement means his pension needs to stretch much further.

If, as is promised, discounts are introduced for energy users who avoid peak-time use, he'd like to be ready to take advantage of that.

But it's been 18 months since he applied to his energy provider to get a smart meter installed and nothing has happened yet. Without one he won't be able to take advantage of any off-peak scheme.

Fortunately Peter and his wife have a host of other money-saving techniques.

"Our house is on a hill, we get really high winds, and it gets really cold. To save money, we'll be shutting off the conservatory.

"We've stopped using the tumble drier - we are using heated racks instead. We also bought fleeces for the winter," he says, adding that switching supermarkets also saved £20 a week.

Peter thinks with all these strategies they should be able to keep monthly bills to £229.

"That will just about be the right amount to see us over the winter."

We'll be answering your questions a little later with the BBC's Kevin Peachey and broadcaster and financial journalist Iona Bain.

If you've got something to ask them, please get in touch by emailing haveyoursay@bbc.co.uk or click the 'Get Involved' button at the top of this page.

As we've been reporting, Ofgem says the average household bill will rise to £3,549 a year from October.

We've put together some cheap solutions to help keep warm this winter:

1. Doors

Warm air wants to leave your home and will find any nook and cranny to do so. As it does, cold air is sucked in to replace it, causing draughts. It makes your home cold and wastes energy.

Shutting doors and closing windows may not be enough. But by simply adding a draught excluder - or even a rolled up towel - the draughts can be blocked. Find out how to make a draught excluder here.

2. Windows

Badly fitting windows or single panes of glass are another place heat is often lost.

If you can't get windows replaced with double glazing, the Energy Saving Trust says it is worth getting some heavy curtains to help keep the heat in the room.

You may not want to sit in the dark all day, so look out for cheap DIY kits that use a thin plastic sheet to cover the window, blocking draughts.

They are sometimes shrink-fitted into place with a hairdryer and can be removed and replaced as required.

3. Loft hatch

Image source, Getty Images

Insulating your loft is like wearing a woolly hat - trapping the warmth below to keep you cosy. However, that hatch is just like any other door and needs attention too.

One suggestion is to glue a plastic bag to the back of the hatch, fill it some of the loft insulation and then seal it up. It should help insulate the hatch and flop over the edges when you pull it shut, stopping draughts escaping.

4. Behaviour

There are some small changes to your daily routine that save energy. The obvious ones are spending less time in the shower (potentially saving about £10 a year), turning off the lights (£14) or turning down the thermostat (saving up to £55).

Other ideas include:

• Put lids on pots and pans when cooking - it'll also speed things up

• Use a microwave to reheat food rather than the oven

• Don't overfill the kettle. Filling a kettle for two cups of tea rather than boiling a full kettle could save you around £45 a year

• Defrost your fridge - it will work more efficiently

If you use a renewable energy supplier you might be wondering why your bill is going up with the energy price cap.

This is because the amount that green energy firms pay the companies that generate the power for them is determined by the wholesale energy market.

One such provider Good Energy explains: "Because the rate we pay our generators is influenced by the wholesale energy market, we have had to raise our tariff rates to reflect the higher wholesale cost of electricity and gas.

They say renewable energy generation also impacts wholesale market prices: "This year, wind energy output has been lower than in the previous five years, which has contributed to the rising cost of electricity.

"We also supply gas. Ten per cent is renewable biogas but the rest comes from the National Grid... which means we’re directly affected by changes to wholesale gas prices."

We're getting some reaction now to the news of the huge rise in the energy price cap.

Becca Lyon, head of child poverty at Save the Children, calls the price cap rise "a full-blown economic crisis for thousands of families".

"Children are at serious risk from today's announcement and could spend this winter in cold homes, with fewer hot meals, despite the best efforts of their parents and carers. Our children deserve better."

Tom Marsland, policy manager at disability equality charity Scope, says today’s announcement "confirms disabled people’s fears".

“We’ve been inundated with calls from disabled people who don’t know which way to turn and feel like they are being punished for using more energy. The government must intervene now."

Frances O'Grady, general secretary of the TUC which supports trade unions, says "millions are facing bankrupting bills in the months ahead".

"Ministers must immediately cancel this catastrophic increase. This is the worst possible time for the government to go missing in action."

David Wallace Lockhart
Political correspondent

Image source, Reuters

Chancellor Nadhim Zahawi acknowledged this morning that the price cap increase would be causing “stress and anxiety” for many.

So people may well be questioning why more government ministers aren’t currently in TV and radio studios speaking to the public.

We expect to hear from the prime minister later today, though we know he believes any extra support has to come from his successor, Liz Truss or Rishi Sunak.

Sunak will be speaking to broadcasters later this morning.

The BBC has requested to speak with Truss. She’s released a statement, but we’ve been told she won’t be doing an interview today.

Image source, Getty Images

Conservative leadership candidate Liz Truss has said she will "ensure people get the support needed" in the coming months after the major rise in the energy price cap.

In a statement, a Truss campaign spokesperson said: "Today's announcement will cause grave concern to many people across the UK who will be worried about paying their bills.

"As prime minister, Liz would ensure people get the support needed to get through these tough times.

"She will immediately take action to put more money back in people's pockets by cutting taxes and suspending green energy tariffs.

"This is on top of ongoing work such as the Energy Bills Support Scheme, which will see a £400 discount paid to consumers from October, and the £1,200 package of support for the most vulnerable.

"Liz will work flat-out to deliver long-term energy affordability and security, unleashing more energy by maximising our North Sea oil and gas production - helping keep bills down in the future."

Truss is currently the frontrunner in the Tory leadership contest against Rishi Sunak.

Earlier, Labour's Shadow Chancellor Rachel Reeves accused Truss and Sunak of setting out their policies on nearly everything "apart from the biggest issue facing our country right now".