The price of gas and electricity is determined by global wholesale prices, which shot up after supplies from Russia were cut as a response to the war in Ukraine – and after energy consumption increased again after COVID.
How much these wholesale energy prices are passed on to customers is controlled by the UK regulator Ofgem in the form of a price cap four times a year.
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This price cap limits the cost households pay per unit of energy (kilowatt hours) they use.
It means that from 1 October, instead of paying a maximum of 28p per kWh for electricity – people will now pay 34p.
And instead of paying a maximum of 7p per kWh for gas – they will now pay 10.3p.
Standing charges, which are the cost of connecting to the National Grid, are also going up with the price cap, but not by very much.
From now they will increase from 45p a day to 46p a day for electricity and 27p to 28p for gas.
Does the price cap cover everyone?
The price cap only covers domestic households in England, Wales and Scotland. The same level of support will be applied to the market in Northern Ireland.
Traditionally businesses are not covered by the price cap, but as part of a separate “energy bill relief” scheme, the government is providing additional support for firms.
You will be included in the price cap if you are a dual-fuel customer (use the same company for electricity and gas) on a standard variable tariff, who pays by direct debit, credit, or prepaid meter.
Standard variable tariffs mean your energy company can change the price per unit at any time – in line with global wholesale prices – but is limited by the price cap.
Fixed tariffs are agreed upon annually and mean the price per unit will not change for that year.
These are not included in the price cap, but the government says its energy price guarantee will mean a discount of 17p per kWh for electricity and 4.2p per kWh for gas.
They say this will bring fixed rates down to similar levels as the energy price cap.
If you are locked into an expensive fixed tariff, you can take a meter reading before 1 October to ensure your energy company honours the price guarantee discount.
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5:26
PM announces £2,500 average price cap
Price cap does not mean energy only costs £2,500 a year
The government estimates that the new price cap will result in average annual energy bills increasing from £1,971 to £2,500.
But that does not mean people won’t be charged more than £2,500 a year for their energy – it is just an estimate for a typical household.
According to Ofgem, a typical household in Britain has 2.4 people living in it – who use 242 kWh of electricity and 1,000 kWh of gas a month.
But all households are different – and their energy usage will depend on how many people live there, what time of day they use the most energy, and how energy efficient their home is.
For example, the government estimates that if you live in a purpose-built flat your average bill will be £1,750.
If you live in a mid-terraced house it will be around £2,350.
Those who live in semi-detached houses will pay around £2,650 a year.
And detached properties will pay roughly £3,300 annually.
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3:36
How to save on energy bills
What extra help is the government offering?
Before Liz Truss was appointed prime minister, former Chancellor Rishi Sunak announced all households would receive a £400 discount on their energy bills between October 2022 and March 2023.
From 1 October people will start to receive a £66 discount for October, another for November, and £67 for December, January, February and March.
Some energy companies are directly applying these to bills, while others will credit the amount to customers’ bank accounts.
Eight million households in receipt of certain benefits will also get £650 to help with their bills.
Pensioners will receive £300 and some people on special disability benefits will get £150.
People on low incomes and pensioners on pension guarantee credit will get £140 off through the Warm Home Discount.
Vulnerable families can also apply for extra help via their local council and their Household Support Fund.
The government’s energy bill relief scheme for England, Scotland and Wales will mean help with firms’ energy bills for six months from 1 October. A parallel scheme is operating in Northern Ireland.
Wholesale prices businesses pay for electricity will be capped at 21.1p per kWh for electricity and 7.5p per kWh for gas.
This will be applied automatically to companies using variable tariffs.
For those on fixed price contracts, the same discounts will be applied if the agreement started after 1 April 2022.
The savings will appear on bills in November and will be backdated to October.
A review will be published at the end of the year which will help identify “vulnerable” businesses that need support beyond March 2023.
Veteran cabinet minister Michael Gove has been awarded a peerage in Rishi Sunak’s resignation honours list.
Mr Gove – now editor of The Spectator magazine – was first elected to parliament in 2005 and immediately joined then-Conservative leader David Cameron’s shadow cabinet.
He was appointed education secretary when the party entered government in 2010 and held multiple cabinet posts until the 2024 general election, when he stood down from parliament.
Mr Sunak elevated seven allies to the House of Lords, including former cabinet ministers Mark Harper, Victoria Prentis, Alister Jack, and Simon Hart. Former chief executive of the Conservative Party, Stephen Massey, also becomes a peer, as well as Eleanor Shawcross, former head of the No10 policy unit. He also awarded a number of honours.
It is traditional for prime ministers to award peerages and other gongs upon their resignation from office – with key political allies, donors and staff often rewarded.
An outgoing prime minister can request that the reigning monarch grants peerages, knighthoods, damehoods or other awards in the British honours system to any number of people.
In the case of peerages, the House of Lords Appointments Commission vets the list, and for other honours, the Cabinet Office conducts checks.
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Resignation honours are separate from dissolution honours, which are awarded by the incumbent prime minister and opposition leaders after the dissolution of parliament preceding a general election.
Here are the biggest names given honours by Mr Sunak:
Michael Gove – peerage
Image: Former cabinet minister Michael Gove. Pic: PA
From when the Conservatives returned to government in 2010, Michael Gove spent almost the whole time in a ministerial role.
After reforming the education system, he went on to hold roles like chief whip, environment secretary, justice secretary and housing secretary.
He led the pro-Brexit side of the 2016 referendum alongside Boris Johnson, and famously sunk the latter’s leadership bid with his own.
However, both failed at that juncture, and Mr Gove’s reputation never recovered to allow him another go at the top job.
The debt was repaid when Mr Johnson fired Mr Gove as his administration collapsed in 2022.
Mr Gove returned to government under Rishi Sunak, and ultimately retired from the Commons at the 2024 election.
James Anderson – knighthood
Image: Lancashire bowler James Anderson. Pic: PA
One of England’s most successful cricketers, Jimmy Anderson, has been awarded a knighthood in avid cricket fan Rishi Sunak’s resignation honours list.
He is regarded as one of the greatest bowlers in the history of the sport, and holds the record for the most wickets taken by a fast bowler in Test cricket.
Jeremy Hunt – knighthood
Image: Jeremy Hunt.
Pic: Reuters
A former chancellor and serial runner-up in Tory leadership competitions, Jeremy Hunt was ever present in Conservative cabinets while the party was in government.
He was both foreign secretary and defence secretary before failing to take over the party after Theresa May stood aside.
Following a stint on the backbenches, Mr Hunt returned as chancellor under Liz Truss in a bid to stabilise markets – retaining this position under Rishi Sunak.
Despite persistent speculation he was set to be ditched in favour of Claire Coutinho, Mr Hunt kept his job until the 2024 general election – where he won his seat and now sits as a backbencher.
James Cleverly – knighthood
Image: James Cleverly.
Pic: PA
A former leader of the Conservatives in the London Assembly, James Cleverly entered parliament at the 2015 general election as the MP for Braintree.
In 2018, he was appointed deputy chairman of the party, and in April 2019, was appointed a minister in the Brexit department.
Boris Johnson appointed him as party chairman after taking over the top job, and he took on a succession of junior ministerial posts before becoming education secretary following Mr Johnson’s resignation as prime minister.
Liz Truss appointed him as foreign secretary – a post he held until November 2023 when Rishi Sunak brought back David Cameron for the role, and he took over as home secretary – a post he held until the general election.
Mr Cleverly was one of the lucky cabinet ministers to survive the Labour landslide and retained his seat. But he was less successful in the Conservative Party leadership contest, losing out in the final round of MP voting.
Andrew Mitchell – knighthood
Image: Andrew Mitchell.
Pic: PA
The former deputy foreign secretary has been a fixture in Westminster since 1987, when he was first elected as the MP for Gedling. He was appointed to the government in 1994, but lost his seat in the 1997 Tony Blair landslide.
He returned to parliament in 2001 as the MP for Sutton Coldfield, and took on a number of shadow cabinet and then cabinet roles, culminating in his appointment to the Foreign Office in 2022, before becoming deputy foreign secretary to David Cameron in 2024.
He rose to public prominence in September 2012 when he allegedly swore when a police officer told him to dismount his bicycle and leave Downing Street through the pedestrian gate rather than the main gate. The incident became known as “Plebgate”.
Mel Stride – knighthood
Image: Shadow chancellor Mel Stride.
Pic: PA
One of Rishi Sunak’s closest aides, he chaired his campaign to be Tory leader against Liz Truss and was rewarded with the Work and Pensions brief when his man finally entered Number 10.
He was also a prominent figure in the downfall of Ms Truss as chair of the Treasury select committee – regularly requesting information from the Treasury and Bank of England that highlighted damaging information.
A capable media performer, he was ever present during the general election as he tried unsuccessfully to get Mr Sunak back into office.
Mr Stride kept his seat after the vote, and was rewarded by Kemi Badenoch with a role as shadow chancellor of the exchequer.
Stephen Massey – peerage
Image: Stephen Massey
Described as a “sensible man” by former chancellor George Osborne, Stephen Massey was appointed chief executive of the Conservative Party in November 2022 after Rishi Sunak took over as leader in the coronation leadership contest following the collapse of the Truss government.
Having spent his career as a financial adviser, Mr Sunak probably thought he was a safe pair of hands in which to entrust the leadership of the party machinery as they built their war chest ahead of the general election to come.
The personal donations of £343,000 to the party and £25,000 to Mr Sunak’s leadership campaign also likely made him an attractive candidate for the job.
Has Rishi Sunak previously awarded honours?
Mr Sunak previously granted peerages to former prime minister Theresa May, Sir Graham Brady, the former chairman of the influential Conservative backbench 1922 committee, as well as his right-hand man Liam Booth-Smith on 4 July 2024 – the day of the general election.
He lost the election by a landslide to Sir Keir Starmer’s Labour Party, and resigned as prime minister that day. He remains in parliament as the MP for Richmond and Northallerton.
When the sun sets on Scunthorpe this Saturday, the town’s steelworks will likely have a new boss – Jonathan Reynolds.
The law that parliament will almost certainly approve this weekend hands the business secretary the powers to direct staff at British Steel, order raw materials and, crucially, keep the blast furnaces at the plant open.
This is not full nationalisation.
But it is an extraordinary step.
The Chinese firm Jingye will – on paper – remain the owner of British Steel.
But the UK state will insert itself into the corporate set-up to legally override the wishes of the multinational company.
A form of martial law invoked and applied to private enterprise.
Image: A general view shows British Steel’s Scunthorpe plant.
Pic Reuters
Political figures in Wales are now questioning why nationalisation wasn’t on the table for this site.
The response from government is that the deal was done by the previous Tory administration and the owners of the South Wales site agreed to the terms.
But there is also a sense that this decision over British Steel is being shaped by the domestic and international political context.
Labour came to power promising to revitalise left-behind communities and inject a sense of pride back into places still reeling from the loss of traditional industry.
With that in mind, it would be politically intolerable to see the UK’s last two blast furnaces closed and thousands of jobs lost in a relatively deprived part of the country.
Image: One of the two blast furnaces at British Steel’s Scunthorpe operation
Reform UK’s position of pushing for full and immediate nationalisation is also relevant, given the party is in electoral pursuit of Labour in many parts of the country where decline in manufacturing has been felt most acutely.
The geo-political situation is perhaps more pressing though.
Just look at the strength of the prime minister’s language in his Downing Street address – “our economic and national security are all on the line”.
The government’s reaction to the turmoil caused by President Donald Trump’s pronouncements on tariffs and security has been to emphasise the need to increase domestic resilience in both business and defence.
Becoming the only G7 nation unable to produce virgin steel at a time when globalisation appears to be in retreat hardly fits with that narrative.
It would also present serious practical questions about the ability of the UK to produce steel for defence and the broader switch to green energy production.
Then there is the intriguing subplot around US-China trade.
While this decision is separate from discussions with the White House on tariffs, one can imagine how a UK move to wrestle control of a site of national importance from its Chinese owner might go down with a US president currently engaged in a fierce trade war with Beijing.
This is a remarkable step from the government, but it is more a punctuation mark than a full answer.
The tension between manufacturing and decarbonisation remains, as do the challenges presented by a global economy appearing to fragment significantly.
But one thing is for sure.
As a political parable about changes to traditional industry and the challenges of globalisation, the saga of British Steel is hard to beat.
Hundreds of barber shops and other cash-heavy businesses have been targeted in a three-week money laundering blitz.
Police went to 265 premises, including vape shops, nail bars, American-themed sweet shops and car washes across England in a crackdown on high street crime.
The National Crime Agency (NCA) said 35 arrests were made, 97 people suspected to be victims of modern slavery were placed under police protection, and bank accounts containing more than £1m were frozen.
More than £40,000 in cash, some 200,000 cigarettes, 7,000 packs of tobacco, and more than 8,000 illegal vapes were also seized during Operation Machinize, which involved 19 different police forces and regional organised crime units.
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Officers also found two cannabis farms containing a total of 150 plants, while 10 shops have been shut down.
The NCA estimates that £12bn of criminal cash is generated in the UK each year with businesses such as barber shops, vape shops, nail bars, American-themed sweet shops and car washes often used by criminals.
Image: Goods seized during a visit to a vape shop in Rochdale. Pic: GMP/PA
Image: Police officers at a shop in Tameside. Pic: GMP/PA
Rachael Herbert, deputy director of the National Economic Crime Centre at the NCA, said: “Operation Machinize targeted barber shops and other high street businesses being used as cover for a whole range of criminality, all across the country.
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“We have seen links to drug trafficking and distribution, organised immigration crime, modern slavery and human trafficking, firearms, and the sale of illicit tobacco and vapes.
“We know cash-intensive businesses are used as fronts for money laundering, facilitating some of the highest harm and highest impact offending in the UK.”
Image: Money laundering crackdown. Pic: NCA
Security minister Dan Jarvis said the operation “highlights the scale and complexity of the criminality our towns and cities face”.
“High street crime undermines our security, our borders, and the confidence of our communities, and I am determined to take the decisive action necessary to bring those responsible to justice,” he said.