LIZ Truss last night warned there is a “difficult winter” ahead – hours before the new energy price cap took effect.
Household bills are expected to rise from today after global wholesale gas and electricity prices shot up.
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While the Prime Minister’s energy price guarantee means the average household shouldn’t pay more than £2,500 a year, she admitted the next few months would be tough.
In an interview with broadcasters on Friday, she said: “I recognise there has been disruption but it was really, really important we were able to get help to families as soon as possible.
“That help is coming this weekend because this is going to be a difficult winter and I am determined to do all I can to help families and help the economy at this time.”
It was the first time Ms Truss had acknowledged there had been disruption following the government’s mini budget, with the pound falling to an all-time low against the dollar.
But she made it clear she stood by the £45billion worth of tax cuts, telling Sun readers she has an “iron grip” on the UK’s finances and that: “This government is on your side.”
Chancellor Kwasi Kwarteng also defended the move by saying ministers “had no other choice” than to do “something different” to spark the economy.
“The British taxpayer expects their government to work as efficiently and effectively as possible, and we will deliver on that expectation,” he wrote in The Daily Telegraph.
“Not all the measures we announced last week will be universally popular, but we had to do something different. We had no other choice.”
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The Chancellor also insisted he will produce a “credible plan” to get the public finances back on track with a “commitment to spending discipline”.
Their comments came at the end of a tumultuous week which saw the pound hit an all-time low against the dollar and the Bank of England forced to spend billions buying up government debt to prevent a collapse of the pensions industry.
The sell-off of sterling prompted fears that millions of mortgage holders could face crippling rises in their repayments as the Bank moves to ratchet up interest rates to shore up the currency and put a lid on inflation.
The turmoil erupted after markets took fright at Mr Kwarteng’s package of unfunded tax cuts – the biggest in 50 years – while committing billions to capping energy bills for the next two years.
But days later, Ms Truss got a double dose of good news as the pound recovered and figures confirmed the UK had dodged a recession.
By Friday, the UK had actually grown 0.2 per cent in three months to June, despite gloomy predictions from the Bank, Chancellor and economists.
The PM insisted that Mr Kwarteng was right to cut taxes as part of their plan to drive up the UK’s sluggish rate of economic growth.
“What is important to me is that we get Britain’s economy back on track, that we keep taxes low, that we encourage investment into our country and that we get through these difficult times,” she said.
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What is the energy price cap?
THE energy price cap sets a limit on the unit price and standing charge that companies can bill their customers.
It is based on wholesale prices over a six-month period.
The Energy Price Cap Guarantee replaces the original Ofgem cap which predicted bills would soar to £3,500.
Now, the average family won’t pay more than £2,500 a year for the next two years on their energy bills from October 1.
This will save the typical household £1,000 a year, the government claims.
And Brits will also still get a £400 rebate on bills this winter.
