Britain’s new Prime Minister Liz Truss is addressing is the UK’s energy crisis. It’s a large part of the cost-of-living crisis that plagued the end of former Prime Minister Boris Johnson’s term. Truss’s plan breaks down into two parts.
Truss will implement a cap on domestic energy prices for homes and businesses. For the next two years, average household bills for heating and electricity will be no more than £2,500 or just under $2,900 per year. The move would prevent household bills from jumping 80% in October, after the regulator Ofgem said the price cap would rise to an average annual rate of £3,548 without further government intervention.
“We do need to make sure that our energy supplies are more resilient and more secure so we are never in this situation again, and we cannot be subject to global energy prices and the actions of dictators,” Truss said on Thursday while announcing her plan.
In addition to the cap, Truss said she will approve more North Sea oil drilling and lift a ban on fracking to increase the domestic energy supply in the UK.
“Today’s actions will deliver substantial benefits to our economy, boosting growth, which increases tax receipts and give certainty to business,” Truss said. “This intervention is expected to curb inflation by up to five percentage points, bringing a reduction in the cost of servicing government debt.”
Estimates have put the cost of the energy cap at more than £100 billion. The government said the package will be funded by borrowing rather than higher taxes imposed on energy companies. On Thursday, the Labor Party said the bill will be footed by taxpayers. The party also expressed environmental concerns and opposition to Truss’s plan.
“Doubling down on fossil fuels is a ludicrous answer to a fossil fuel crisis,” Sir Keir Starmer, labor party leader, said. “If all countries took the approach advocated by her new energy secretary of squeezing every single drop out of their fossil fuel reserves, global temperatures will rise by a catastrophic three degrees.”
The Biden Administration’s actions have aligned with the Labor Party and contrasted the UK’s new energy plan. This week, the administration reached a settlement that requires the government to reexamine potential climate damages from oil and gas leases. The decision has blocked drilling on more than 58,000 acres of land. The federal government will refrain from issuing any drilling permits across 113 leases spanning 58,617 acres in Montana, North Dakota and South Dakota.
