Chancellor George Osborne will cut energy bills by an average of £50 and offer home efficiency eco-grants of £1,000 by cracking down on tax avoidance.
In a bid to seize the initiative from Labour on cutting energy prices, Mr Osborne said he would use his upcoming autumn statement roll back the energy levies paid by people on their gas and electricity bills, and make sure that energy firms passed on the savings.
He plans to cut the average household energy bill by £50 and offer grants of at least £1,000 to homeowners to help improve their energy efficiency.
“We’re doing it in the way that government can do it, which is controlling the costs that families incur because of government policies,” Mr Osborne told the BBC’s Andrew Marr show.
“We’re also doing it in a way that’s not going to damage the environment, or in any way reduce our commitment to dealing with climate change. Nor are we going to reduce our commitment to helping low income families with their costs of living and their electricity bill.”
This is not a con, we’re not pretending that we can freeze the world’s gas price Chancellor George Osborne
He said the cuts will be funded from “additional taxes that we will raise from dealing with tax avoidance”.
The government will also prolong a subsidised housing insulation scheme, which is also included in energy bills, to help bring down its cost to consumers.
Prime Minister David Cameron wrote a joint article with Deputy Prime Minister Nick Clegg in the Sun on Sunday to back the plans, saying: “Instead of a fake giveaway, we have found another way to support Britain’s hard-pressed families.”
The coalition criticsed an opposing plan by Labour leader Ed Miliband, saying his bid to to cap energy bills would fail because energy firms would raise their prices either side of his proposed 20-month bills freeze.
Chief Secretary to the Treasury Danny Alexander said he hoped the coalition’s proposal would persuade Labour to drop its “barmy idea to con the public” on freezing energy bills.
Get back to the drawing board, come up with a policy, we’ve had lots of u-turns already Shadow Chancellor Ed Balls
When asked how he would ensure that energy companies passed on savings to consumers, Mr Osborne said: “We’ve been in discussion with the energy companies, they’ve got to make their own announcements in due course, but we’re pretty clear that they have got to pass on any reduction in the cost that government puts on energy bills.”
“We’re doing this in a way that is credible. This is not a con, we’re not pretending that we can freeze the world’s gas price.”
But shadow Chancellor Ed Balls said the government should “get a grip” and encouraged him to back Labour’s plans.
He told the Andrew Marr Show: “I set two tests for George – one, would he stop bills rising? Secondly, would the energy companies pay? If David Cameron and Nick Clegg are right, he fails both tests.
“I would say to George, while the Prime Minister is in China, get back to the drawing board, come up with a policy, we’ve had lots of u-turns already, do another one, freeze the bills, take Ed Miliband’s policy – that would be wise.”