British Prime Minister Liz Truss on Thursday unveiled a two-year plan to place a maximum annual cap of GBP 2,500 on soaring energy bills for households from October 1 to address the country's cost-of-living crisis.
“This is the moment to be bold. We are facing a global energy crisis and there are no ‘cost-free’ options. There will be a cost to this intervention," Truss said in the House of Commons
British Prime Minister Liz Truss on Thursday unveiled a two-year plan to place a maximum annual cap of GBP 2,500 on soaring energy bills for households from October 1 to address the country's cost-of-living crisis.
In her first major announcement since taking office earlier this week, the new leader said her measures would save people around GBP 1,000 a year based on expected energy prices. This is because the energy price cap set for companies as a maximum limit they can charge customers was due to rise from the current level of GBP 1,971 to GBP 3,549 in October, an effect of spiralling global costs in the wake of the Russia-Ukraine conflict.
“This is the moment to be bold. We are facing a global energy crisis and there are no ‘cost-free’ options. There will be a cost to this intervention," Truss said in the House of Commons.
As part of a three-pronged strategy, she said the government will take action to “ramp up supply” of domestic energy, boost growth and “curb inflation by up to five percentage points”, and up to GBP 40 billion will be made available to ensure wholesale energy firms have the cash they need to “manage price volatility”.
The move is in addition to the GBP 400 payment to households set out by former chancellor and Tory leadership contender Rishi Sunak earlier this year.
A six-month scheme for businesses, schools and hospitals will provide equivalent support over the winter, with further targeted support for specific industries like hospitality set to follow after that. There is currently no cap on energy costs for businesses and a specific figure on support has not been given due to differences in how the wholesale energy market operates compared to the retail market for households.
Truss said her new Chancellor, Kwasi Kwarteng, will be setting out the costs of the energy bills plan “as part of his fiscal statement later this month” and reiterated that her government “will not be giving in to the Leader of the Opposition who calls for this to be funded through a windfall tax”.
“That would undermine the national interest by discouraging the very investment we need to secure home-grown energy supplies,” she said.
The Opposition Labour Party argues a freeze on bills should be paid for through a windfall tax on the profits of oil and gas producers instead, something the new Prime Minister has been against throughout her leadership campaign to be elected Conservative Party leader.
The cost-of-living crisis triggered by soaring energy bills was the dominating issue over the course of her eight-week race with Sunak for the top job to replace Boris Johnson at Downing Street. In her inaugural speech at 10 Downing Street, Truss had indicated that her first major announcement would address this issue.