Chancellor George Osborne confirmed widely-leaked cuts in green levies to help lower the cost of energy bills.
The soaring cost of energy bills has been one of the big issues affecting household finances ahead of the Autumn Statement, with some energy firms raising prices up as much as 10.4%.
The government said the changes it will introduce should cause energy bills to fall by around £50 a year.
Osborne confirmed what Prime Minister David Cameron had already said, that the government will “roll back” green levies, which are imposed on energy companies by the government to reduce carbon emissions. The energy firm, in turn, pass this cost on to the consumer.
The tweaks to green levies include: a two-year rebate linked to energy efficiency schemes that is expected to save the average customer £12 a year; a reduction for providers in the cost the Energy Company Obligation (ECO), an insulation scheme, which will save the average customer £30-35; and a reduce in energy network costs, which will save customers an average of £5.
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. We’re doing this in a way that supports the lowest income families. Reduces carbon. Supports investment in our energy infrastructure.
“[It] does not add a penny to the tax bill families pay. My political philosophy is clear: instead of penalising people with more taxes and more regulation, give them incentives by reducing their taxes and their bills.”
The initiative was warmly welcomed by consumer group Consumer Futures. Adam Scorer, Director of Consumer Futures said: “It’s good that the government has recognised consumer concern over energy prices and we welcome any initiative to reduce the burden on households.
"But any initiative to reduce energy costs needs to strike a balance between short term relief and longer term benefits. While any price reduction, however minimal is good for consumers, this one has come at a cost. Consumers need long term solutions to energy affordability. The most sustainable way to do that is through the provision of energy efficiency measures. "