Breaking news

What could Liz Truss do about soaring energy bills?

Assuming she becomes prime minister next week, Liz Truss and her would-be chancellor Kwasi Kwarteng will consider options for dealing with the cost of living crisis, particularly for those paying high energy bills. Here we consider its possible moves.

Targeted aid for the most vulnerable

Although people with relatively high incomes may struggle to pay their energy bills this winter, Truss has made it clear that any support payments will be targeted to help the most vulnerable. Many of these people are already fuel-poor and struggling, and the price cap will increase by 80% in October. Truss erred against universal ‘handouts’ and could focus on helping pensioners and those on Universal Credit by extending the £650 given to the 8million lowest income households and payment of £300 to a similar number of pensioners.

Fuel discount increased from £400 to £800

A quick way to help the most people would be to double the rebate on home fuel bills. From October, £400 will be paid in six installments to around 29 million households. Officials have considered increasing this amount, potentially doubling the amount, as the price hike forecast is considerably higher than when the initial support was put in place. This rebate is easier to administer, but a blunt instrument because more well-to-do households will benefit from the abatement.

tax cuts

A menu of tax cuts is Truss’ preferred route. She has already promised to reverse the controversial rise in National Insurance contributions, but could make it apply only to workers and leave the increase in place for businesses. The planned increase in corporation tax, from 19% to 25%, from 2023, could also be reduced. Truss is also said to have looked at plans to reduce VAT across the board, either reducing it from 20% to 15% or to 10%. If this more drastic move is not pursued, it could still remove VAT from energy bills, which is expected to save the average household £160.

Taxes and energy rationing: Truss and Sunak disagree in latest Conservative leadership election – video

New windfall tax to freeze price cap

Truss has ruled out a new windfall tax, but Treasury insiders believe that with energy companies set to make more than £170billion in profits over the next two years, the move is inevitable. Kwarteng is said to think it might be necessary. He could opt to extend the energy profit tax, introduced for North Sea oil and gas operators, to renewable energy companies. The levy is popular with Tory voters and could give the government leeway to help with bills, possibly passing Labour’s plan to freeze the energy price cap at its current level of just under of £2,000 a year rather than allowing it to rise in line with world wholesale gas prices.

Deficit fund for suppliers to cover rising fuel prices

An idea floated by energy company bosses suggesting the government set up a deficit fund to cover the difference between what people pay and how much it costs to supply their homes with gas and electricity. The fund could be underwritten by the government or a financial institution and repaid by consumers over a period of 10 to 15 years to smooth out costs. Suppliers would be expected to use the time the program is in place to focus on green energy investments. While that would spread out energy bills, easing some of the pain today, it would still increase costs for the future.

Decoupling electricity from gas

Truss could follow the lead of the European Commission, which has promised measures to curb soaring wholesale electricity prices. Brussels is studying the reform of the marginal pricing system in which the most expensive power station called upon to meet demand on a given day sets the wholesale price of electricity for all suppliers. This means that gas-fired power stations, which are still needed to keep the lights on in many countries, tend to dictate the wholesale price of electricity for the rest of the market, even though renewable energy can be generated. cheaper. The UK government has already started a consultation on decoupling its gas and renewable energy prices.

Usage Discounts

The chief executive of the UK’s third-biggest energy supplier, Ovo Energy, has called on the government to introduce a “gradual” scheme to tackle bills. This would involve reducing the price of energy, but only for a limited amount of use per household, meaning that energy consumption beyond that level would be charged at a higher price. This would aim to prioritize support for poorer customers, as higher-income households typically use more energy, according to Stephen Fitzpatrick, the founder of Ovo, which serves 4.5 million customers.

. could do Liz Truss face soaring bills energy bills energy

. Liz Truss soaring energy bills

PREV Glasgow firefighter warns fuel poverty could lead to fire risk
NEXT Joe Biden raises concerns over Twitter hack after bizarre ‘democracy’ post | World