What £2,500 price freeze means for customers and how it will be paid back

The government has announced that domestic energy bills will be frozen at £2,500.

Ofgem's energy price cap will be replaced with a new "energy price guarantee" in an attempt to ease the financial pressure many households face with their energy bills. Additionally, a similar scheme will be set up for businesses, schools, hospitals, and other public organisations and charities to "offer equivalent support", however, this will only last for six months.

Meanwhile, "vulnerable" industries will receive longer-term support that will be set out later following a review in three months to decide which sectors should receive the ongoing help. The government will wait on an emergency Budget later on this month to set out how much the new plan will cost - current estimates predict it could go up to £150 billion, the Mirror reports.

Read more: Liz Truss announces £2,500 energy price freeze in new emergency measures

Liz Truss refused to give in to pressures from the opposition to impose a windfall tax on energy and oil companies and has instead announced that it will be funded by extra public borrowing, leaving the cost to taxpayers in the long run. Meanwhile, ministers will continue to bring in a £400 discount to energy bills which was announced by the previous government.

It means that the average household will pay close to the current £1,971 on their energy bills anuually. The Treasury also estimates that the measure will knock up to five per cent off inflation forecasts.

Furthermore, the fracking ban has been lifted with the government claiming that drilling for shale gas could start in as little as six months. Meanwhile, a new round of North Sea gas and oil licences, which are due to start next week, could see more than 100