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Liz Truss freezes energy bills at £2,500 for two years saving Brits £1,000 in 'extraordinary' plan to tackle crisis
8 September 2022, 11:46 | Updated: 8 September 2022, 13:31
- Household energy bills will be capped at £2,500 a year for the next two years
- Liz Truss said this will save the average household £1,000 a year
- How it is costed will be revealed later, but the green levy has been suspended
- Government will boost energy supply, including through North Sea oil and gas, and through nuclear, solar and wind
Liz Truss has unveiled her plan to tackle the energy crisis, which she says will save the typical household £1,000 a year.
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The Government will introduce an "energy price guarantee" which the new Prime Minister said will "give people certainty on energy bills".
It means no household will pay more than £2,500 a year for each of the next two years.
It has partly been funded by suspending the green levy, and supersedes the Ofgem price cap.
As part of the measures, the ban on fracking has also been ended, with supporters of the method hoping it would boost domestic energy production and help lower costs.
Domestic energy production will also be boosted by issuing more than 100 licences to exploit North Sea oil and gas with the aim of getting up to a quarter of British electricity production from nuclear by 2050.
She told MPs in the House of Commons on Thursday: "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.
"This guarantee, which includes a 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. It comes in addition to the £400 energy bills support scheme. This guarantee supersedes the Ofgem price cap and has been agreed with energy retailers."
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Liz Truss sets out plans to freeze energy bills at £2,500 a year
Ms Truss also announced help for businesses, charities and public sector organisations with their energy costs, offering a guarantee similar for private households that will last for six months.
It will provide more help after those six months for vulnerable parts of the economy, such as pubs and the wider hospitality sector.
Who gets help will be decided in a three-month review, and she said businesses "in the meantime" should look at ways to become more energy efficient.
The cost of the plan will be set out by new chancellor Kwasi Kwarteng, though Ms Truss again ruled out a windfall tax.
It will be brought in by emergency legislation.
It is thought it could cost in the region of £150bn and will partly be offset by improving energy supply.
An energy supply taskforce, similar to the Covid vaccine group, has been set up which will negotiate new contracts with gas suppliers, and she wants the UK to be a net energy exporter by 2040.
Labour leader Sir Keir Starmer challenged the Government's arguments about a windfall tax deterring investment.
Sir Keir told the Commons: "It does come down to this basic point. Everybody in this House recognises that profits are needed for investment in all businesses."
After jeers from the Tory benches, the Labour leader added: "But in this case these are unexpected profits that they were not expected to make.
"When the chief executive of BP says this will not deter any investment, it is a bit rich for those opposite to say he is completely wrong.
"He is the chief executive of BP, he has made his case, it is the complete opposite of the case the Prime Minister is trying to make."
Domestic energy, including North Sea oil and gas production, will be ramped up, with more than 100 new licences to exploit it set to be awarded.
Ms Truss will also launch what she called 'Great British Nuclear', a bid to generate up to 25 per cent of Britain's electricity by 2050.
The Government will reform the regulation of the energy market, and ensure it is still on target for Net Zero by 2050.
It wants to accelerate supply from other sources including wind and solar.
Sir Keir suggested the prime minister was not on the side of voters, as she expected them to foot the bill for the cost-of-living support package.
He told the Commons: "Ask voters whether they think that it is fair that they pick up the bill, or those companies that make profits they didn't expect to make, and there is only one answer to that question.
"It is a very simply question of whose side are you on?"
He added: "I am afraid this isn't a one-off because not only is the Prime Minister refusing to extend the windfall tax, she is also choosing to cut corporation tax. An extra £17bn in tax cuts for companies that are already doing well.
"That means handing a tax cut to the water companies polluting our beaches, handing tax cuts to the banks, hand a tax cut to Amazon.
She is making that choice even though households and public services need every penny they can get."