Risks and reward over Government plans to cut energy bills

Laura Kuenssberg

Former Business Editor

The Government said households should save an average of £50 a year due to the plans. Credit: Rui Vieira/PA Wire

So, after a frenzied couple of weeks the Government has this morning laid out its ideas on how to cut energy bills this winter - a bit.

They calculate on average it will take about £50 off your bill, although that will depend on the company you are with.

But it will have part of the desired effect, with npower and British Gas confirming they will be able to cut their planned price rise - not get rid of it all together but reduce at least - and the other power companies have already promised to do the same.

But this plan has been put together in haste - one of the companies just told me they've been "caught on the hop" this morning, and had been prepared for the announcement tomorrow or Thursday. And there are risks as well as rewards.

Spreading the cost of "ECO", the energy efficiency scheme, should in theory cut about £30 off the bill, although that will vary company by company.

But it leaves the Government open to charges that they are cutting back on the one thing that really makes a difference to bills in the medium term - insulating our homes.

They insist support will get through for the most vulnerable households, but many in the industry fear it could hit jobs as well as reducing the number of households who'll get help.

Cutting distribution costs by £5 and providing a £12 rebate will also chip away at bills. And subsidies to business for green technologies have not, in the face of Liberal Democrat resistance, been touched.

Bills will still of course go up, and by rather a lot - the average increasing by about £70 rather than £120.

The energy companies are privately pretty pleased that finally the Government has accepted what they more or less used to deny, that their policies were making up a significant part of the reason why bills had gone up - ministers "have completely changed their story" one said to me this morning.

But a couple of days ahead of the Autumn Statement the Government is now able to say and to show that actions they have taken will cut our bills, or at least stop them going up as quickly.