The energy price cap will remain in place until April and not for two years as originally promised by prime minister Liz Truss.
This morning chancellor Jeremy Hunt confirmed the change in policy and said that while the energy price guarantee would remain unchanged until April, it will be reviewed after that.
Hunt said he and the prime minister were in agreement that beyond April, "it would not be responsible" to continue exposing public finances to the volatility in international gas markets.
Instead, Hunt said a Treasury-led review would be held into how energy bills are supported beyond April next year.
He said the objective of the review would be to “design a new approach that will cost the taxpayer significantly less than planned” while ensuring enough support for those in need.
Any support for businesses will be targeted at those most affected, Hunt said.
He also added the new approach would also “better incentivise energy efficiency”.
“The most important objective for our country right now is stability,” Hunt said.
The announcement came as part of a slew of other rollbacks on September’s "mini" Budget that sent the markets into turmoil and saw Truss sack Chancellor Kwasi Kwarteng after 38 days in office.
The energy price guarantee was announced by Truss on September 8, and promised that energy prices will be frozen so the average household will pay £2,500 for two years.
Energy companies will be capped on the amount they can charge per unit of energy used, which means households which consume more energy will therefore pay more in bills.
It was estimated the plan would cost the UK an estimated £150bn, the biggest expense announced in the “mini” budget.
The announcement today by the chancellor that the guarantee will only be in place until April will see this bill reduced significantly for the government.
The chancellor is expected to announce further changes to fiscal policy on October 31.
jane.matthews@ft.com
