Energy bills to be capped at £2,500 for typical household

New Prime Minister Liz Truss will limit energy bill rises for all households for two years as the new prime minister tries to prevent widespread hardship.

A typical household energy bill will be capped at £2,500 annually until 2024.

The huge support scheme could cost up to £150bn, but Ms Truss refused to put a figure on it, saying "extraordinary times call for extraordinary measures".

Businesses will get help, with prices capped for six months, a shorter period of protection than many had hoped for.

The help will be for everyone in England, Scotland and Wales with equivalent assistance for Northern Ireland.

But there are concerns the measures are not targeted enough, with no additional support for the most vulnerable. As a result, millions are still expected to be in fuel poverty this winter.

The energy price cap - the highest amount suppliers are allowed to charge households for every unit of energy they use - had been due to rise to £3,549 for a typical household from October.

To limit the amount customers' bills go up by, the unit price will be capped, although household energy bills will vary according to how much gas and electricity they use.

The government will compensate energy firms for the difference between the wholesale price for gas and electricity they pay and the amount they can charge customers.

Commenting on what steps households should now take, Greg Jackson, chief executive and founder of Octopus Energy, said firms were still working through the details and customers should "sit tight and wait to hear from their energy supplier".

"Nothing will change until 1 October and we'll be in touch with everyone before then."

The dramatic state intervention will be funded by government borrowing, adding to the UK's already large debt pile. The total cost of the support will depend on the cost of energy on the international energy markets, which can be extremely volatile.

This comes after Ms Truss rejected calls to extend a windfall tax on gas and oil company profits to pay for the package.

Labour leader Sir Keir Starmer said the refusal to fund it with a windfall tax showed she was "driven by dogma" and "it's working people who will pay for that".