UK PM unveils energy bill price cap

Liz Truss, British Prime Minister

© APA | Liz Truss, British Prime Minister

# 08 September 2022 15:11 (UTC +04:00)

Liz Truss has announced a vast plan to freeze average energy bills for households at £2,500 until the next election as she declared that “extraordinary times call for extraordinary measures”, APA reports citing The Times.

In a statement to MPs the new prime minister announced a guarantee on energy prices which she said would save the average household £1,000 a year based on present energy prices from October 1.

However, the scheme is less generous for business than had been expected. The government plans to introduce a six-month cap on business energy bills which will be reviewed after six months. It will then be focused on the most vulnerable sectors.

The government declined to put a cost on the scheme, highlighting uncertainty over future wholesale prices. However, The Times has been told that the government’s “gross” costings are £150 billion.

The scale of the scheme is such that the government believes it will reduce the peak rate of inflation by between 4 per cent and 5 per cent. Economists have forecast that inflation could reach as much as 18 per cent next year without intervention.

Truss also announced the end of the fracking ban and plans for 100 new oil and gas drilling licences in the North Sea.

She said she was “acting immediately” so that people and businesses were supported over the next two years.

“Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again,” she said.

Truss also announced that the government was setting up an energy supply task force led by the official who led the vaccines task force.

This will begin negotiations with domestic and international suppliers to agree long-term gas contracts. It will also negotiate with renewable suppliers of electricity — which are not fixed-price contracts — to cut their prices.