The UK’s 56th prime minister, and its third female leader, Liz Truss, revealed long-awaited proposals to tackle the ongoing energy crisis, shortly after her appointment.
Truss’s £2,500 yearly cap which will be imposed for the next two years beginning from October 2022 aims at supporting homes and businesses during the current economic crisis. The exact cost of the intervention has not yet been specified by the Prime Minister; however, it is estimated to be in the region of a £150 billion transfer to energy suppliers to make up for the capped consumer prices. The newly appointed chancellor, Kwasi Kwarteng, will deliver a fiscal report following Liz Truss’s attendance at the UN General Assembly towards the end of this week.
Alongside this scheme, Truss is additionally focusing on increasing the UK’s energy resilience through overturning the ban on fracking, promoting new sources of energy supply, and encouraging over 100 new oil and gas licenses.
This comes after the monthly increases in energy and gas prices in April 2022 were the highest (54% increase) since 1970 and are estimated to “increase by further 80% in October 2022” as confirmed in the Parliament’s Research Briefing on Domestic Energy Prices.
The Prime Minister’s strategic intervention scattered uncertainty amongst the Labour politicians following Truss’s decision to rule out financing the scheme by extending a one-off tax on energy suppliers. Instead, the money will be taken out of the Treasury and borrowed; a decision which according to the leader of the Labour party, Keir Starmer, will mean that the “bill will be picked up by the working people”.
Moreover, it is believed that the £2,500 cap will still leave millions in fuel poverty this winter considering that the price cap that will be updated in 2024 will be at least £500 higher.
The controversy spreads further among environmentalists who believe that the Prime Minister’s process of achieving energy self-sufficiency through lifting a ban on fracking will hinder the 2050 net-zero commitment.
The government imposed a moratorium on fracking in November 2019 as a response to scientific analysis which revealed a connection of minor earthquakes in Lancashire that were associated with the drilling. Liz Truss, as opposed to her predecessor, believes that lifting the ban will massively improve the energy crisis in as early as six months – despite some industry experts saying it would take years to set up new fracking facilities.
Whereas critics believe that such a transition would not only hinder the major international commitment but also empathize that the entire process would not take merely six months but could take up to a decade to produce sufficient results.
