New Prime Minister Liz Truss announced today that household energy bills will be capped at £2,500 per year until 2024 as part of an estimated £150bn cost of living support scheme (estimated because Ms Truss refused to put a figure on the amount of support that would be provided, stating that “extraordinary times call for extraordinary measures”).
Businesses will also receive support, as bills are set to be capped at their current rate for six months. While this protection period is much shorter than was hoped by many, the Prime Minister said that further assistance will be given to vulnerable industries such as hospitality, with plans being formulated within the next three months.
This help package will be rolled out across the entire UK with Northern Ireland receiving equivalent assistance.
Concerns, however, have been raised that the measures should be more targeted at the most vulnerable. Millions are expected to be in fuel poverty this winter despite the assistance and many are critical over Ms Truss’ pledge to compensate energy firms for the difference between the price cap (which was due to rise by 80% in October) instead of focusing on ensuring that families can afford their bills.
It is difficult to calculate the costs of the scheme as the final figure will depend on the cost of energy on the international markets, which are often very volatile. The government intends to borrow the money to cover the support, adding to the economic burden brought about by the pandemic and the war in Ukraine.
The Prime Minister rejected Labour’s calls to extend a windfall tax on gas and oil company profits to cover the support package in a move which Labour leader Sir Keir Starmer said was “driven by dogma” adding that “working people” are the ones who will pay in the end.
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