Truss: UK Will Cap Domestic Energy Prices and End Fracking Ban

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.



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