Home > About us > Personal finance > How will Liz Truss’ cost-of-living promises affect OneFamily customers?

How will Liz Truss’ cost-of-living promises affect OneFamily customers?

September 2022

Our new prime minister, Liz Truss, has promised to “transform Britain into an aspiration nation”. But what does this really mean for working families?

“This is a tough time for families up and down the country,” said Boris Johnson in his outgoing speech as he stepped down as prime minister.

With a recession predicted, bills soaring, and everyday necessities costing more than ever, you could be forgiven for calling that an understatement.

Liz Truss believes she has what it takes to make times less tough and reduce the burden that the cost-of-living crisis is having on families. Here’s how she plans to do it.

The cost of energy will be "capped"

The government is introducing an "Energy Price Guarantee". For two years from 1 October 2022, Truss has said that households with typical energy usage in the UK will pay no more than £2,500 a year for their energy, which includes both gas and electricity.

That’s roughly just over £200 a month.

This doesn’t mean that everyone’s bills will now increase to that amount. Energy companies have been "capped" (limited) to charging a maximum amount for each unit of gas or electricity that a customer uses. You will still need to pay for what you use.

£2,500 is a pretty scary figure and it’s the most energy companies have ever been allowed to charge, but it could have been much worse. Before this rule was brought in, it looked like energy companies were going to charge typical households up to £3,549 a year.

Every household will also get an energy bill discount

This plan was already in place before Liz Truss became prime minister, but she has confirmed that it will go ahead.

All UK households will receive a £400 discount on their energy bills across the next six months. Roughly £66 will be taken off each bill from October until March. You’ll see the discount on your bill.

If you pay by direct debit then you’ll simply be charged less each time a payment is due. If you use a prepayment meter, the discount will be added as credit to your meter.

Businesses will also get a “cap” on their energy bills

Energy companies will also be limited in how much they can charge businesses, including schools, for their gas and electricity.

This promise is a bit more vague. We know that the limit will be in place for at least six months and that it will be reviewed in three months’ time to see if should be kept for longer.

How will the energy discounts be paid for?

It’s worth noting that gas and electricity is still getting more expensive. The government’s plans mean we won’t pay the full cost, but it does still need to be paid for.

Essentially, the government is going to foot the bill. If the gas and electricity that you use in a year costs more than £2,500 then the government will pay the rest. At the moment, there’s been no announcement about how much the government expects to pay.

Liz Truss’ plan also includes ways of hopefully making energy cheaper.

To do this, the government is looking for more ways to source gas and generate electricity. If there is more available then it should cost less.

Fracking – which was banned in the UK in 2019 because of fears it may cause earthquakes – is likely to be restarted. Fracking is a technique for getting oil and gas out of the ground by drilling into the earth. According to Truss, it will only be used in areas where local people are happy for it to ahead.

The government plans to launch new oil and gas drilling licenses so that more can be taken from sites in the North Sea – we’ll find out more about that in the next few weeks.

To bring bills down further, the government is also going to scrap “green levies”. This is a cost that is added to your bill to fund things like renewable energy projects. According the Ofgem, this is about 9-12% of the amount you currently pay.

Liked this article? You may also be interested in...

Challenging times

If you're experiencing financial hardship, please let us know and we'll help wherever we can.

Read more

Help and support

How to contact OneFamily and let us know about any changes to your circumstances.

Read more

OneFamily news

The latest from the OneFamily team about our charity partnerships and volunteering activities.

Read more

Managing your personal finances

Food for thought to help you manage your budgeting.

Read more