Liz Truss reveals plans to tackle rising energy bills

New prime minister Liz Truss formed her government this week

The UK's new prime minister Liz Truss has laid out her government's plans to limit the rise of energy bills for households.

Ms Truss announced the government's proposed actions in the House of Commons on Thursday, where she told MPs that the typical household energy bill would be capped at £2,500 a year for the next two years, from 1 October.

It will save people £1,000 a year based on expected energy prices, she said.

This is because the energy price cap, which limits what suppliers can charge people for the energy they use, was due to rise from £1,971 to £3,549 in October.

The prime minister said the price cap on energy bills would be introduced in addition to a one off £400 discount which all households in the UK are due to receive from October.

Ms Truss also announced a new six-month scheme for businesses, including charities and public sector organisations, which will provide "equivalent" support.

Liz Truss announced the government's plans in the House of Commons

After that, ministers plan to offer "focused support" to vulnerable sectors, like those within the hospitality sector including pubs and restaurants.

The prime minister rejected calls from some MPs including opposition leader Keir Starmer for what's known as windfall tax. A windfall tax is a one-off tax that a company is ordered to pay by a government.

The aim of a tax like this is to target firms that benefit from something they were not responsible for.

Energy companies are getting much more money for their oil and gas than they were last year, partly because demand for fuel has increased as the world emerges from the pandemic, but more recently because of supply concerns due to Russia's invasion of Ukraine.

Energy companies are getting more money for their oil and gas

Some MPs believe a windfall tax is needed in order for the government to be able to pay for its proposed actions to support households and businesses with their energy bills.

Labour leader Sir Keir Starmer said the energy plan announced by Liz Truss "does not come cheap".

"That's why we've been calling for a windfall tax since January, and it's why we want to see it expanded," he said.

"The consequence is the bill will be picked up by working people."

Labour leader Keir Starmer criticised the government's refusal to introduce a windfall tax

However, Ms Truss said the government would fund its plans by boosting economic growth and limiting the rise in inflation, which has led to things becoming more expensive.

As part of the government's plans to boost economic growth, Ms Truss said the government would increase the UK's production of energy and lift a ban on fracking, which is a technique for extracting gas and oil from shale rock found deep underground.

Fracking is a practice many have criticised as it's said to be damaging the environment.

Meanwhile, Liberal Democrat leader Ed Davey accused the government of bringing in a "phony freeze".

"This will still leave struggling families and pensioners facing impossible choices this winter as energy bills almost double," he said.

"Liz Truss and the Conservatives are choosing to allow this huge hike to people's heating costs, while refusing to properly tax the eye-watering profits of oil and gas companies."