The cost of living crisis is becoming one of the leading topics for debate between the political parties as we draw closer to the next General Election.
Labour leader, Ed Miliband has pledged to freeze energy prices for 20 months if his party came to power.
In response the Prime Minister, David Cameron promised to roll back some of the green taxes and environmental obligations on energy firms so that they can reflect this in lower bills for customers.
On Thursday, in his Autumn Statement, the Chancellor, George Osborne gave details of how customers will see a £50 reduction in what they would have otherwise paid in energy bills over the next 12 months.
Mr Osborne said: "This week we deliver on the promise made by the prime minister to roll back those levies. The result: an average of £50 off family bills.”
The savings come from green levies being lifted off the power companies and being moved to general taxation. Further savings come from the government agreeing that energy firms can slow down the timetable under which they have to install energy efficient equipment and insulation into customer homes under the Energy Company Obligation.
Most of the big energy firms have already announced price increases averaging 8.2 per cent, putting up prices by over £100 a year. However, they said they would immediately pass on the savings from the changes to government policy, so these price rises will be reduced.
EDF and E.ON have limited their price increases to just under four per cent, because of the new policy that moves the cost to general taxation rather than having to be recouped from customers through their energy bills.
Ann Robinson from uSwitch welcomed the announcement but warned customers: “It's important that consumers understand that even if this reduction is passed on in full their bills will still be higher than they were previously - the reduction won't be enough to wipe out recent price hikes.”
Mr Osborne also announced that the tax paid by companies searching for shale gas will be halved from 62 per cent to just 30 per cent.
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