Average energy bills will rise to £3,000 a year from April under the government’s ‘guarantee’, Jeremy Hunt has announced.
The measure, outlined in his first autumn statement as chancellor, potentially means misery for millions.
The figure is currently £2,500 after ministers were forced to act in the face of soaring energy bills.
But the policy costs the government tens of billions of pounds a year.
Despite saying that energy bills were one of his “biggest worries about families”, Mr Hunt announced that from April the average cost will rise to £3,000.
Setting out his plans for tax rises and spending cuts, he promised to “tackle the cost-of-living crisis” and “rebuild our economy”.
The Chancellor said there would be a “shallower downturn” as a result of his measures but the Office for Budget Responsibility (OBR) believed the economy was “now in recession”.
He told MPs he was delivering a “balanced path to stability” which involved taking “difficult” decisions.
But “anyone who says there are easy answers is not being straight with the British people: some argue for spending cuts, but that would not be compatible with high-quality public services.”
Mr Hunt also announced plans to raise an extra £14bn by increasing the energy windfall tax. The Energy Profits Levy, as the tax is known, will rise from 25% to 35%.
Shadow chancellor Rachel Reeves said: “After months of resistance, including from this Prime Minister, the government has finally been dragged kicking and screaming to extend the windfall tax that Labour first called for in January.
“The government has announced plans for energy bills next year, but bill-payers will still see them go up next spring, leaving far too many people wondering how they’ll make ends meet.
“For every pound of windfall tax left on the table, working people are forced to pay the price.”
Child Poverty Action Group chief executive Alison Garnham said: “The flat-rate support for energy costs means families with kids will have to spend more but get proportionately less support. As a result, children will go without and government will have to accept responsibility for the consequences.”
Liberal Democrat Treasury spokesperson Sarah Olney said: “Everyone is being forced to pay the price for this Conservative government’s incompetence.”
