LONDON (Parliament Politics Magazine) – Beginning in October, a typical household’s annual electricity and gas bills will not exceed £2,500, the British prime minister Liz Truss, announced.
Ms. Truss said the new price guarantee will run for two years and save the typical home in England, Wales, and Scotland £1,000 a year on future bills in her first significant policy statement as premier.
Northern Ireland, which has its own energy market, will receive the same amount of assistance.
Now was the time to be bold. There were no free solutions to the world’s energy problem, said the PM to the Commons.
The plan, which will be implemented through emergency legislation and is expected to reduce inflation by up to five percentage points, builds on the £400 payment to households announced earlier this year by former chancellor Rishi Sunak.
For businesses, schools, and hospitals, a six-month plan will offer equal winter assistance.
After that, there will be more targeted help for particular sectors like the hospitality industry, with a review every three months to determine which sectors should benefit.
Because the wholesale and retail energy markets operate differently, there is currently no restriction on the cost of energy for businesses, and no specified amount of support has been provided.
Energy customers with fixed contracts will not be impacted by the price guarantee, but ministers are sure that after discussions with providers, discounts will eventually be provided to these customers.
Plan won’t “come cheap”
More government borrowing will be used to pay for the proposal, which is projected to cost tens of billions. Later this month, Chancellor Kwasi Kwarteng is set to outline the anticipated costs in his fiscal statement.
The PM has flatly rejected Labour’s claim that a bill freeze should be funded by a windfall tax on the profits of oil and gas producers.
The PM’s dismissal of a windfall tax, according to party leader Sir Keir Starmer, demonstrates that she is “driven by dogma,” and “working people will pay for it.” The proposal will not “come cheap,” he added.
The difference between the new, lower price and what energy providers would charge if the guarantee weren’t in place will be paid to them.
The price cap, which presently states that typical household bills should not exceed £1,971, was set to increase to over £3,500 in October and even more when the following level was expected to be set in January.
By April of next year, estimates indicated it might have risen as high as £7,700.
Lifting the restriction on fracking is part of efforts to increase energy supplies.
The new price guarantee is based on the current price cap and the £400 bill discount for all homes, so expenses will be comparable to what the general public is now paying.
Ms. Truss promised to make the UK a net energy exporter by 2040 and claimed that the cost of the additional support would be covered by expanding energy supplies and establishing an energy taskforce.
The PM added that they were also stepping up the production of domestic energy from all sources, the North Sea included.
They would be starting a new licensing round, and they expected that around 100 new licences would be granted as a result.
The PM also declared she was lifting the fracking ban as part of the longer-term plans to deal with the energy crisis.
It indicates that shale gas extraction is likely to be approved where communities support it.
Although there will be a review to make sure the policy is implemented by 2050 “in a way that is pro-business and pro-growth,” the commitment to net zero remains.
That was part of her strategy for rebuilding the economy. Secure energy supply was essential for prosperity and growth, however it had been neglected for too long, the PM said.
She would finally put an end to the UK’s short-termist approach to energy security and supply.
