The Prime Minister of the UK, Liz Truss, has announced a broad stimulus package that will aim to help Brits with rising energy bills and help attract investment in the energy sector. While making the announcement, she said that it is a "new energy price guarantee that will give people certainty on energy bills."
This is
Truss's first major move as the UK's new leader. She said the typical household
"will pay no more than £2,500 (US$ 2,880) per year for each of the next two
years." She also said that it will give the average household "a
£1,000 saving per year."
The cap
will be placed from October 1, 2022.
Help for
Businesses
Also, there
will be an equivalent guarantee for businesses for the next six months. Even
after that, extended support will be offered to vulnerable sectors like
hospitality.
Alex Veitch
of the British Chambers of Commerce said: "It is encouraging that the
government is seriously considering the support it can give to businesses
during these very difficult times. But it remains to be seen whether these
plans will go far enough in offering the help that many firms so desperately
need."
Truss also
asked the businesses to seek ways to become more energy efficient and try to
produce their own energy. In a statement, she mentioned that the U.K. will be "a
net energy exporter" by 2040. She added, "Secure energy supply is
vital to growth and prosperity. I will end the UK's short-termist approach to
energy supply once and for all."
The Cost
The entire
cost of this package will be shared by the Finance Minister of the UK, Kwasi
Kwarteng, in a few days. Truss has also said she will curb inflation by up to
5%.
There are
questions regarding how Truss will fund the bills. There is speculation that
the bill might land in the lap of the taxpayers in the longer term.
Before the
announcement, the energy bills for British residents were set to hit £3,549 per
year from October 1. They were earlier £1,971. The cap was estimated to climb
to £4,649.72 in the first quarter of next year and then £5,341.08 in the second
quarter. Consultancy Cornwall Insight forecasts estimated these figures.
The price
cap in the UK is set by the regulator Ofgem. It limits the amount a supplier
can charge for their tariffs. This limit has risen higher recently due to the
rise in wholesale prices. As a result, Brits have seen bills skyrocket quickly.
Truss has also
announced that there will be a temporary suspension of green levies to fellow
lawmakers in the House of Commons.
Oppositions'
Opinion
The
opposition Labor Party says British taxpayers will have to foot the bill for
the new changes announced by the new PM. Labor leader Keir Starmer stated, "the
bill will be picked up by working people," not by oil companies that are
forecast to make 170 billion pounds (about US$ 195 billion) in windfall profits
over the next two years due to rising energy prices.
Sources:
https://www.cnbc.com/2022/09/08/british-pm-liz-truss-announces-a-cap-on-energy-bills.html
https://www.ctvnews.ca/business/truss-u-k-to-cap-domestic-energy-prices-end-fracking-ban-1.6059796
https://www.bbc.com/news/business-62801913