Tea Prime Minister had barely surfaced after days of silence amid the market mayhem that followed Kwasi Kwarteng’s shock tax cut announcement when she unleashed another wave of criticism this morning.
With the focus momentarily shifting from the collapsed pound to household energy bills, personal finance experts took the baton from economists to express their exasperation at Liz Truss’s failure to correctly communicate key policy areas. This time, it was Ms Truss’s repeated claim that annual household utility bills would be capped at £2,500 this winter.
Ms Truss emerged for a series of short BBC regional radio interviews this morning after being conspicuously missing in action yesterday as the consequences of the sweeping tax cuts announced by her Chancellor continued to wreak havoc on the financial markets.
The Prime Minister asserted multiple times during these interviews that the “maximum” amount Britons will pay for their annual energy bills from October will be £2,500 thanks to a Government support package intended to protect consumers from rocketing costs when the price cap shoots up on Saturday.
Speaking to Radio Leeds, Ms Truss said: “The action we’ve taken on energy bills will mean that…people living in West Yorkshire aren’t going to be facing energy bills of £6,000, which is what was forecast….The maximum will be £2,500.”
She went on to tell Radio Kent that by stepping in, the Government had made sure that “nobody is paying fuel bills of more than £2,500”, before reiterating this claim several more times, including on Radio Nottingham, where she said that the support announced would ensure “people across this country are not facing energy bills of more than £2,500”.
The Prime Minister did in some instances insert the caveat that this figure applied to “typical” household bills, though critics have branded the phrasing she used misleading.
The new cap coming into effect on Saturday, like previous caps imposed by the regulator Ofgem, does not limit the overall amount utility companies can charge households. Rather, it limits standing charges – the fixed daily amount utility companies charge customers regardless of how much power they use – and unit rates – the price-per-unit of the gas and electricity you use.
Currently, the price cap is £1,971 a year for typical usage. It was due to rise was due to rise to £3,549 in October but the new Energy Price Guarantee support coming into effect next month will put the cap for typical usage at £2,500.
However, many households will exceed “typical” usage and will be billed significantly more than this capped figure, contrary to what Ms Truss’s comments suggest.
MoneySavingExpert founder Martin Lewis expressed frustration at the Prime Minister’s remarks. Her suggestion that there is a hard cap on bills will cause confusion and could mean many billpayers are left with the impression that they can use unlimited energy for £2,500, he said.
“There is no £2,500 cap on energy bills,” Mr Lewis said. “[If you] use more [you will] pay more. £2,500 is just what someone with average use [would] pay.”
He added: “The reason it is so important not to communicate that there is a £2,500 cap is it risks some people, possibly vulnerable elderly people, thinking they can keep the heat on max all winter, and they won’t pay more than a certain amount.”
Felicity Hannah, who presents the BBC Radio 5 Live personal finance program Wake Up to Money, said: “Please be really clear – what Liz Truss said about ‘the maximum’ bill being £2,500 doens’t mean it’s an All You Can Heat buffet offer this winter. If you use more than an average home you will pay more.
“I’ve seen a number of people being dangerously confused about that – and I’m afraid that the PM’s comments may have inadvertently confused more.”