New prime minister Liz Truss has confirmed that the UK government will limit energy bill rises for all households for two years, reports BBC News. (The announcement is widely reported as a “cap” of £2,500 on energy prices, but is actually a maximum amount that a household with average energy use will pay per year.) The outlet continues: “Businesses will get help, with prices capped for six months, a shorter period of protection than many had hoped for. The help will be for everyone in England, Scotland and Wales with equivalent assistance for Northern Ireland.” The cost of the “huge support scheme” could hit £150bn, the outlet says, “but Ms Truss refused to put a figure on it, saying ‘extraordinary times call for extraordinary measures’”. Details of the costs are expected to be set out by new chancellor, Kwasi Kwarteng, in a fiscal statement in the coming weeks, notes Politico
. “This is the moment to be bold,” Truss told MPs, stressing that there are "no cost free options” to lessening the impact of the energy crisis, the outlet says. Bloomberg
notes that “the problem for the government is that, while the pandemic is largely finished as drain on Treasury, there’s no end in sight for the gas shortages that came with the war between Russia and Ukraine”. The government expects the package of measures to curb inflation by up to five percentage points, reports Reuters
. The plans include Truss’s long-promised move for the “temporary removal” of green levies on bills, says another Reuters
article. Truss also outlined plans “to make sure we have security of [energy] supply for the long-term” (see below).
The measures include a plan for the Bank of England and the Treasury to offer up to £40bn to help energy companies with a cash crunch amid fears volatile wholesale prices could cause some to collapse, says the Times
. The Guardian
explains that “companies who use the Bank of England’s energy markets financing scheme will have to sign up to a ‘wider set of conditions’, the Treasury said”. The paper notes that, during the coronavirus pandemic, “support schemes some companies were banned from paying dividends after receiving loans”.
Opposition leader Sir Keir Starmer criticised the government for refusing to expand a windfall tax on energy producers to fund the package of measures, reports the Press Association
. In parliament, Starmer said: “Ask voters whether they think that it is fair that they pick up the bill, or those companies that make profits they didn’t expect to make, and there is only one answer to that question.“ Scottish first minister Nicola Sturgeon said she welcomed the “very belated” plan, reports the Press Association
, but warned that "it does not represent a halt to the rise in energy bills”.
speaks to business owners who say the measures “didn’t go far enough”. And the Financial Times
reports that “British businesses have warned that time is running out for the government to provide details of its plans to subsidise energy supply, with questions over the scope and pricing of the support as well as the threat of a six-month cliff edge”. Figures produced for the Guardian
suggests that, even at a price cap of £2,500 a year, “the poorest households will spend as much as 32% of their entire budget on gas and electricity, though the previously announced £400 discount will help relieve some of the financial pain”. The Press Association
reports that consumer groups have welcomed the plan to freeze energy prices as a “huge relief”, but warned that many would still struggle with “sky high” bills this winter. And the newswire
also reports that charities have warned the new energy plan contains a “big hole” as it will not protect the poorest families and disabled people who are already struggling with their bills. The Times
notes that, despite the UK having “the oldest and some of the least energy-efficient houses in Europe”, the subject “was not mentioned in Truss’s statement”.
Despite the government’s guarantee to lower bills, energy regulator Ofgem has said it will continue to announce the cap on household energy prices, reports the Press Association