A typical household will pay no more than £2,500 annually for its gas and electricity bills from the start of October, Prime Minister Liz Truss has announced.

In the first major policy announcement of her premiership, Ms Truss said the new price guarantee will last for two years and save the average household £1,000 a year on future bills.

“This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options,” she told MPs in the Commons.

The move is in addition to the £400 payment to households set out by former chancellor Rishi Sunak earlier this year.

A six-month scheme for businesses, schools and hospitals will provide equivalent support over the winter, with further targeted support for specific industries like hospitality set to follow after that.

There is currently no cap on energy costs for businesses and a specific figure on support has not been given due to differences in how the wholesale energy market operates compared to the retail market.

The price guarantee, expected to cost tens of billions, will be funded through more government borrowing.

Labour argues a freeze on bills should be paid for through a windfall tax on the profits of oil and gas producers instead, something the PM has dismissed out of hand.

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