Liz Truss announced today in the House of Commons a two year energy price freeze.
The Ofgem price cap, which was due to rise by 80% to £3,549 on October 1, will be replaced with a “two year energy price guarantee”. This means energy bills will be frozen at £2,500 for two years in the run-up to the next general election in 2024 as families battle the cost-of-living crisis.
A scheme for businesses, schools, hospitals, other public organisations and charities will “offer equivalent support” but last for just six months. Truss announced in her speech that a review in three months would decide which sectors should receive ongoing help.
The government currently estimates that this scheme will cost around £150bn. Truss plans to introduce extra public borrowing to fund the scheme, which will pass the cost onto taxpayers eventually. The Government will also remove green levies, worth £150, from energy bills but continue to fund projects to boost renewables.
The previously announced £400 for all households to help with energy bills will still go ahead, leaving average house bills closer to Ofgem's current cap of £1,971. The Treasury estimates these measures will knock up to 5% off inflation forecasts.
The new Premier also reversed the ban on fracking following a recently completed review. It means that shale gas drilling will be allowed within six months, according to the government.
During her campaign for the Tory leadership, Ms Truss advocated expanding oil and gas production in the North Sea but noted that fracking should only take place where it was supported by the local community. Furthermore, a new round of North Sea gas and oil licences - which are due to start next week - could see more than 100 new permissions granted.
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