Roundup: Concerns remain as UK PM unveils energy plan

0 Comment(s)Print E-mail Xinhua, September 9, 2022
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LONDON, Sept. 8 (Xinhua) -- United Kingdom (UK) Prime Minister Liz Truss on Thursday outlined a new plan to support households and businesses with their energy bills, but experts said it may not be enough to help the vulnerable and the huge cost would lead to higher debt for the government.


Under the latest plan, a typical UK household will pay no more than 2,500 British pounds (2,875 U.S. dollars) a year for their energy bill over the next two years from October, according to an official press release published on Thursday.

As the country's energy regulator just announced in late August that the energy price cap will rise by 80 percent to 3,549 pounds per year from October, the new policy will save the average household 1,000 pounds a year.

Green levies worth around 150 pounds are temporarily removed as well. This comes in addition to the announced 400-pound energy bill discount.

For businesses and other non-domestic energy users, including charities and public sector organizations like schools, a six-month scheme will offer equivalent support as is being provided for consumers.

"The cap is welcomed as it will help families stay warm this winter, while the package of measures announced for businesses will be a lifeline to thousands of companies that were previously not subject to the price cap and were facing huge rises in bills from next month," Tom Gilbey, an equity research analyst at investment service provider Quilter Cheviot, said.

The UK also plans to accelerate domestic energy supply with actions like launching a new oil and gas licensing round, lifting the moratorium on shale gas production and driving forward the acceleration of new sources of energy supply from the North Sea oil and gas to clean energy like nuclear, wind and solar.


Despite the huge support package, energy bills are still considered too high. Even with the freeze, typical costs will still be double the energy prices domestic consumers were paying only a year ago, according to Gareth Miller, chief executive officer at market research firm Cornwall Insight.

Energy bills are "still sky high," Dame Clare Moriarty, chief executive at charity Citizens Advice, said. "A freeze may not be enough to reverse the devastating trend in people coming to us because they've run out of food or can't top up their gas and electric."

Amid persistently high inflation, low-income families have borne the brunt as food and energy prices are soaring. For those at the sharpest end of the price increase, however, the plan will be "a huge disappointment," according to Sarah Coles, senior personal finance analyst at financial services company Hargreaves Lansdown.

"They need a broader package of measures, providing meaningful support for the most vulnerable. Without it, a freeze will simply slow the pace at which things get much, much worse," Coles added.

The total cost of the intervention is estimated at 150 billion pounds, and it would be twice as expensive as the 70-billion-pound furlough scheme announced during the COVID-19 pandemic, according to Paul Dales, chief UK economist at consultancy Capital Economics.

All these would come with consequences. Looser fiscal policy will probably just lead to tighter monetary policy, and paying a chunk of the utility bills of households and businesses will be expensive for the government and will lead to bigger budget deficits and higher debt, Dales added. Enditem

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