Liz Truss' fake £2,500 price cap claim has left personal finance experts reeling

Liz Truss’ fake £2,500 price cap claim has left personal finance experts reeling

The prime minister had barely surfaced after days of silence amid the market chaos that followed Kwasi Kwarteng’s shock tax cut announcement when it sparked another wave of criticism this morning.

As the focus momentarily shifts from the plummeting pound to household energy bills, personal finance experts have taken over from economists to express their exasperation at Liz Truss’ failure to properly communicate key policy areas. This time it was Ms Truss’ repeated claim that annual household utility bills would be capped at £2,500 this winter.

Ms Truss emerged for a series of short interviews on BBC Regional Radio this morning after apparently missing yesterday as the fallout from sweeping tax cuts announced by her chancellor continued to wreak havoc on financial markets.

The PM has repeatedly claimed during these talks that the ‘maximum’ amount Britons will pay on their annual energy bills from October will be £2,500. thanks to a government support package intended to protect consumers from soaring costs when the price cap rises on Saturday.

Speaking to Radio Leeds, Ms Truss said: ‘The action we have taken on energy bills will mean that… people living in West Yorkshire will not face £6,000 energy bills, what was expected… The maximum will be £2,500.

She went on to tell Radio Kent that by intervening, the government had ensured ‘no one is paying fuel bills over £2,500’, before repeating the claim several times, including on Radio Nottingham, where she said the announced support would ensure that “people across the country are not faced with energy bills over £2,500”.

The Prime Minister has in some cases inserted the caveat that this figure applied to “typical” household bills, although critics have called the wording she used misleading.

The new cap coming into force on Saturday, like previous caps imposed by regulator Ofgem, does not limit the overall amount utility companies can charge households. Rather, it limits ongoing charges – the fixed daily amount that utility companies charge customers, regardless of how much energy they use – and unit rates – the unit price of gas and oil. electricity you use.

Currently the price cap is £1,971 per year for typical use. It was due to rise to £3,549 in October, but the new energy price guarantee which comes into effect next month will cap typical usage at £2,500.

However, many households will exceed ‘typical’ usage and be charged significantly more than this capped figure, contrary to what Ms Truss’ comments suggest.

MoneySavingExpert founder Martin Lewis expressed frustration with the Prime Minister’s remarks. His suggestion that there is a hard cap on bills will cause confusion and could mean that many bill payers will feel like 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. £2500 is exactly what someone with average use [would] Pay.”

He added: “The reason why it is so important not to communicate that there is a cap of £2,500 is that it risks some people, perhaps vulnerable elderly people, thinking that they can keep the heat up all winter, and they won’t pay more than a certain amount.”

Felicity Hannah, who presents BBC Radio 5 Live Wake Up to Money’s personal finance programme, said: ‘Please be very clear – what Liz Truss said about the ‘maximum’ bill of 2 £500 doesn’t mean it’s an All You Can Heat buffet. offer this winter. If you use more than an average home, you’ll pay more.

“I’ve seen a number of people get dangerously confused about this – and I’m afraid the Prime Minister’s comments may have inadvertently confused more.”


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