Liz Truss is set to unveil her plan to shield households from soaring energy costs
It is likely to be the defining moment of her premiership and will see the energy cap according to reports at around £2,500 at a cost estimated to be around £100 billion
The plan is expected to include moves to increase the UK’s energy security which will see an increase in extraction of gas and oil from the North Sea and allowing fracking
This morning the new levelling up Secretary Simon Clarke has said the controversial practice of fracking should be “looked at” as part of new measures to diversify the UK’s energy supply
The announcement will be made in the form of a “general debate” and not a ministerial statement, meaning the government does not have to publish details in advance and Truss does not have to face sustained questions from MPs.
The Prime Minister has announced a two year freeze on energy costs for consumers with a cap of £2.500
“This Government is moving immediately to introduce a new Energy Price Guarantee that will give people certainty on energy bills. It will curb inflation and boost growth. ” she said
“This Guarantee – which includes the temporary suspension of green levies – means that from October 1 a typical household will pay no more than £2,500 per year for each of the next two years, while we get the energy market back on track. This will save a typical household £1,000 a year.”
Businesses will be given the equivalent help on energy bills which is being offered to consumers. Liz Truss said that the support for businesses will be in place for an initial period of six months. After those six months there will then be support provided to vulnerable sectors like hospitality.
The Bank of England will set up a new scheme worth up to £40bn to ensure that firms operating in the wholesale energy market have the liquidity they need to manage price volatility.
“This will stabilise the market and decrease the likelihood that energy retailers need our support like they did last winter.” said Truss adding that “by increasing supply, boosting the economy and increasing liquidity in the market, we will significantly reduce the cost to government of this intervention.”
There will be two reviews, one of energy regulation and one of net zero led by Chris Skidmore MP
She has confirmed that the Fracking ban will also be lifted
“We will end the moratorium on extracting our huge reserves of shale, which could get gas flowing in as soon as six months, where there is local support for it.” Truss says
A new round of North Sea gas and oil licences could also see more than 100 new permissions granted according to the statement
“We will make sure that Britain is a net energy exporter” by 2040 says Truss adding that she will end the short termism of Britain’s energy strategy
The package is expected to reduce inflation by up to 5 percentage points from where it otherwise would have been.
Chief Economist at the Joseph Rowntree Foundation, Rebecca McDonald, said:
“The Government at last grasps the severity of this emergency. These moves will head off the unbelievable price predictions made during the summer that filled so many low-income families with dread. Struggling households now have some meaningful reassurance but they remain in the dark about their security beyond April.
“People are already unable to pay a range of bills so, even after today’s announcement, the failure to offer further targeted support will feel like a knockout blow to the millions of people agonising about their finances.
“The promise of a growing economy on the horizon will be cold comfort when people have seen their benefits payments fall behind inflation and other bills continue to rise.
“This is why the Government must do more in its fiscal statement to stop the poorest going without the essentials even after big energy price rises are frozen. Those suffering hardship now deserve to know what additional support they will get as cost-of-living pressures continue.”
