Since October, the energy price cap, which applies to the great majority of homes, will increase by 80% to an average of £3,549 annually.
Thursday, Liz Truss will present her strategy to assist consumers and companies with skyrocketing energy costs.
Downing Street stated that the measure will be “bold” and “decisive” and would benefit individuals across the United Kingdom who are facing soaring energy costs, while also enhancing the domestic energy supply.
Ms. Truss is scheduled to present her suggestions to the House of Commons, launching a wider debate on energy pricing.
Before the announcement, the incoming prime minister stated, “I am aware that families and companies across the nation are concerned about how they will make ends meet this fall and winter.
Putin’s war in Ukraine and weaponization of gas supplies in Europe are driving a spike in world prices, and this has made it all the more apparent that we must strengthen our long-term energy security and supply.
“We will take urgent measures to assist individuals and businesses with their bills, as well as decisive action to address the core causes of these issues so that we do not find ourselves in this position again.”
“We will outline our intentions to fulfill this promise and create a successful Britain for all.”
Ms. Truss’s plan to reduce the cost of living will be the first significant policy move of her premiership, following months of criticism for a lack of extra aid to handle the consequences of energy-driven inflation, which is at a 40-year high.
Early signs indicate that a price freeze is imminent, and the Treasury may exclude households from funding the cost of the program, meaning that the cost will not be reflected in future bills.
She is set to freeze household bills at approximately £2,500 but has rejected the use of a windfall tax on the earnings of oil and gas firms to pay the package, which is estimated to cost up to £150bn.
Once the £400 subsidy for each home and other bill adjustments are taken in, bills would return to their existing level of approximately £2,000 per year.
A government source told that the Treasury will effectively provide financing, directly through government borrowing as opposed to state-backed loans, to cover rising wholesale gas prices for both families and companies.
This would enable domestic gas and electricity suppliers to deliver energy at about their existing yearly average rate – possibly until the next election in 2024 – as wholesale prices continue to surge in response to Russia’s war in Ukraine.
However, he vowed “serious action” and added, “This is something we must do. The nation cannot focus on anything else until this is completed.”
The pledge of increased aid follows an enormous increase in the price of raw energy, which was compounded by Russia’s February invasion.
Since October, the energy price cap, which applies to the great majority of homes, will increase by 80% to an average of £3,549 annually.
There are rumors that the amount could approach £5,000 next year.
Businesses that are not covered by the price ceiling have had to absorb growing gas and electricity costs far earlier, exposing them to unsustainable bills and putting employment and inflation at risk as they pass costs on to consumers.
It is expected that businesses, though not necessarily large enterprises, will receive more assistance to mitigate the already observed energy price hikes.
Sir Keir Starmer questioned Ms. Truss about her energy plans during her first session of Prime Minister’s Questions on Wednesday at noon.
“I will ensure that our energy plan supports businesses and individuals during the current price crisis, as well as ensuring that long-term supplies are available,” she stated.
Ms. Truss stated that her ideas will provide people with “assurance to ensure that they can get through this winter and have the energy supplies they need at a price they can afford.”
In response, Sir Keir criticized Ms. Truss’s failure to tax oil and gas companies’ profits, stating, “Is she telling us that she will leave these massive surplus profits on the table and force working people to foot the price for decades?
Earlier on Wednesday, the governor of the Bank of England told members of parliament that he welcomes the prospect of a “clear policy stance” on addressing the rise in energy costs, as markets stress the nation’s economy.
Following the conclusion of the Tory leadership contest, which coincided with six weeks of erratic market behavior, Andrew Bailey deemed it “vital” that a clear path forward emerges.
During her maiden speech outside Downing Street after being officially appointed by the Queen, Ms. Truss stated that the United Kingdom would “ride out the storm” of rising energy bills and guaranteed this week’s implementation of measures to assist households.
